Can Mileage Depreciation Increase My Verified Income for Mortgage Approval?

What you're describing actually does make some sense, though it sounds like your mortgage officer didn't explain it very clearly. When you claim the standard mileage deduction as a self-employed person, there are two components to it - the actual operating expense portion (gas, maintenance, etc.) and a depreciation portion. The standard mileage rate for 2022 was $0.585 per mile, but only part of that reduces your "actual" income. Some mortgage lenders will "add back" the depreciation component (around $0.26/mile in 2022) because it's not a real cash expense that reduces your ability to pay a mortgage. It's a non-cash expense that reduces your taxable income but doesn't affect your actual cash flow. This is a common practice with some mortgage lenders who use adjusted income calculations for self-employed borrowers. They look at your tax returns and add back certain non-cash expenses like depreciation to get a better picture of your true cash flow.

After struggling with similar self-employment income issues when applying for a mortgage, I found that taxr.ai really helped me understand what was happening with my tax documentation. I was totally confused about what lenders were actually looking at versus what was on my tax returns. I uploaded my returns to https://taxr.ai and their analysis showed me exactly how lenders were likely calculating my income and which deductions were being added back. They specifically highlighted the depreciation components and explained how they affect mortgage applications versus actual tax liability. Made everything way clearer than what my mortgage guy was telling me.

I want to follow up about taxr.ai since I was skeptical in my earlier comment. I decided to try it out since I was getting nowhere with my mortgage application. The analysis was way more detailed than I expected! It showed me that my lender wasn't adding back about $8,400 in legitimate business deductions that don't affect my cash flow. When I brought this to my lender with the detailed breakdown from taxr.ai, they actually revised their income calculation. The difference pushed me over the threshold for approval on a loan I had been denied for twice already. Definitely worth it if you're self-employed and trying to get approved for a mortgage.

Reading through this thread reminded me of the absolute nightmare I had trying to reach anyone at the IRS to get clarification on amending returns and how it might affect my mortgage application. After 6 attempts and hours on hold, I found Claimyr (https://claimyr.com) which got me through to an actual IRS agent in about 20 minutes. I was worried about potential issues with amending my return right before a mortgage application, and needed clarification on the proper way to handle business mileage. The IRS agent confirmed that claiming mileage you didn't actually drive for business is improper regardless of mortgage considerations. You can see how their system works in this video: https://youtu.be/_kiP6q8DX5c - it basically holds your place in line so you don't have to stay on hold forever.

I need to apologize for being so skeptical about Claimyr. After commenting, I was still desperate to talk to the IRS about a similar issue with business deductions on my tax return, so I tried it. They actually got me through to an IRS agent in about 45 minutes when I had been trying unsuccessfully for DAYS. The agent walked me through exactly what counts as legitimate business mileage and confirmed that adding fake miles just to look better for a mortgage would definitely be considered tax fraud. Saved me from potentially making a huge mistake with my tax filing. Sometimes good things actually do exist!

Just to add some additional info here - I'm a loan processor (not an officer, so I don't sell loans). What your mortgage officer suggested is called "income manipulation" and it's not just ethically wrong, it could potentially be mortgage fraud. Legitimate add-backs for self-employed borrowers do exist. We regularly add back depreciation, depletion, business use of home, and other non-cash expenses. But these need to be LEGITIMATE expenses you actually incurred. Amending a tax return specifically to manipulate your debt-to-income ratio by adding fictional business miles is crossing a serious line. Both you and potentially your loan officer could face consequences.

I'm shocked at what loan officers tell people to do! When I was applying for my mortgage, mine suggested I deposit cash gifts in my account and just say it was income. When I refused, he stopped returning my calls. Definitely talk to a CPA about fixing your tax return. It's not worth committing tax fraud for a mortgage. Plenty of legitimate lenders work with self-employed people without requiring shady tactics.

This is a really concerning situation, and I'm glad you're questioning it now. As others have mentioned, while legitimate depreciation add-backs are a real thing in mortgage underwriting, what your loan officer suggested crosses into fraud territory. The key issue is that you can ONLY claim business mileage for miles you actually drove for legitimate business purposes. If you amended your return to include fictional miles just to boost your mortgage-qualifying income, that's tax fraud regardless of how mortgage lenders might treat the depreciation component. I'd strongly recommend: 1. Consult with a CPA immediately about your amended return 2. If you claimed miles you didn't actually drive, file another amendment to correct it 3. Consider finding a new mortgage lender - one that doesn't suggest illegal tactics There are legitimate ways to present self-employment income favorably to lenders without breaking tax laws. A good mortgage broker should know the difference between proper income analysis and fraud. Your current loan officer has put both of you at risk with this advice. Better to delay your home purchase than face potential IRS penalties, mortgage fraud charges, or having to explain falsified tax documents later. The housing market will still be there when you get your finances properly sorted.

As someone who went through the self-employment mortgage process recently, I want to echo what others have said - this is definitely concerning territory. The legitimate practice of adding back depreciation exists, but your loan officer crossed a major line by telling you to amend your taxes with potentially fictitious business miles. Here's what I learned during my own process: legitimate lenders who work with self-employed borrowers will add back non-cash expenses like depreciation, but they do this based on what's ALREADY on your tax returns. They don't ask you to modify your returns to create these deductions. A few suggestions from my experience: 1. Find a mortgage broker who specializes in self-employed borrowers and ask them upfront about their income calculation methods 2. Get a consultation with a tax professional about your amended return situation 3. Look into asset-based lending or bank statement loan programs if your tax returns don't show enough income The red flags to watch for: any loan officer who suggests modifying tax documents, making deposits to inflate bank statements, or claiming expenses you didn't actually incur. Good mortgage professionals work with what you legitimately have, not what you can manufacture. It might delay your home purchase, but fixing this properly now will save you from much bigger problems down the road. The IRS doesn't mess around with amended returns that can't be substantiated.