We are in the early stage of applying and since our 2016 taxes aren't filed yet I'm trying to figure out the best strategy.
Our business is set up as an LLC that is taxed as a corporation, so no K1. We take payroll checks from the business so a **bleep** of the income is W-2, the rest generally stays in the LLC as retained earnings.
Last year the profit was in the 20k range so we did not take a dividend and left it all as retained earnings. This year, the profit is around $90k and to lower the overall taxes our account says to take a $50k dividend... it will save us roughly $9k in taxes.
Now the problem. The mortgage broker is saying that because this is the first year of the dividend, it can not count as income? Losing $50k in income will keep us from qualifying for anything worth buying... The alternative they say is to not take the dividend and pay the extra $9k in taxes and be able to buy this year instead of waiting another year. It almost feels like a $9k fee to be allowed to buy a house.... Of course if we wait a year its likely that home prices will have increased more than the $9k anyway... ugh...
Any thoughts or similar experiences?
