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Can I Borrow Money If I have Tax-Exempt Income?
Question: How is tax-exempt income treated on a loan application?
Answer: Lenders have a wonderful expression which explains how non-taxable payments are handled -- they are "grossed up."
This means that if you take in $1,000 in tax-exempt payments and state and local taxes are 17 percent, it would take an income of $1,204.82 to have a $1,000 income after taxes. The lender would compute the application on the basis of the $1,204 figure. See lenders for specific practices.
© 1997 Peter G. Miller. All Rights Reserved.
Written by Peter G. Miller.
© 1997 Peter G. Miller. All Rights Reserved. Rules, Disclaimers & Notices.
Copyright © 2012 Realty Times. All Rights Reserved.
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