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As an entrepreneur, your 2024 tax strategy can significantly influence your mortgage qualification through early 2027.

When you’re self-employed, choosing how to report income isn’t just about tax savings—it’s about mortgage eligibility.

Today, we’ll explore how to balance tax planning with smart mortgage strategies.

Now, let’s dive in.

For self-employed Canadians, there are two primary approaches to mortgage qualification:

1. Traditional Mortgage Route:

Based on Personal Income:

• Lenders look at your personal income tax returns over the past two years.
• Net income matters more than gross earnings.
• Low declared income? Your borrowing power could be significantly reduced.

2. Alternative Mortgage Route:

Based on Business Cash Flow:

• Lenders assess your business’s most recent 12 months of cash flow.
• Strong business performance can boost your mortgage qualification, even if personal income is minimized for tax purposes.

Choosing the Right Approach:

• If you’re aiming for a traditional mortgage, reporting higher personal income in 2024 might be necessary.
• If alternative lending makes more sense, strategic income reporting could help you minimize taxes while maintaining strong business cash flow.

💡 Learn more about:

Self-Employed Mortgage Options in Canada

Why the Long-Term Impact?

When applying for a traditional mortgage, lenders often request:

• Two years of tax returns (e.g., 2025 and 2026 for a 2027 application).

If your 2024 income is low, it may drag down your average income for years to come.

Key Consideration:

Filing low income in 2024 could impact your mortgage qualification until you’ve filed your 2026 tax return in early 2027.

Tax Planning Tip:

If you plan to apply for a mortgage soon, work with an accountant to balance tax efficiency with mortgage readiness.

Traditional Mortgages:

Pros:

• Slightly Lower interest rates compared to alternative lenders.
• Access to mainstream lenders (e.g., big banks, credit unions, etc.).

Cons:

• Requires higher declared personal income.
• Will need a strong credit score and low debt levels.

Alternative Mortgages:

Pros:

• Focus on business cash flow rather than personal income.
• Flexible qualification criteria, ideal for entrepreneurs.
• Able to retain more money for home purchase by reducing tax burden.

Cons:

• Higher interest rates and fees.
• May involve private or B lenders, not traditional banks.

💡 Explore more:

Traditional vs. Alternative Mortgages for Entrepreneurs

1. Evaluate Your 2024 Income Strategy:

• Traditional Route? Consider reporting more income in 2024 to boost eligibility.
• Alternative Route? Focus on maximizing business cash flow while minimizing personal income.

2. Consider Incorporating Your Business:

Incorporation can:

• Lower your tax rate, keeping more money in the business.
• Complicate mortgage qualification, as lenders may focus on lower net income.

3. Avoid Common Pitfalls:

 Owing CRA Taxes:

• Lenders will avoid approving a mortgage if you have outstanding tax debt.

 Late Filing:

• File 2024 taxes on time to avoid delays in mortgage processing or fees from the CRA.

Important Dates:

CRA Tax Deadlines

As an entrepreneur, your 2024 tax strategy isn’t just about saving on taxes—it’s about unlocking mortgage opportunities.

• Choose whether to optimize for taxes or mortgage eligibility based on your 2027 plans.
• Consider whether a traditional or alternative mortgage makes the most sense.
• Collaborate with professionals (e.g., accountant, mortgage broker) to strategically plan your income.

Start planning now to ensure your 2024 tax strategy aligns with your mortgage goals.

By making smart choices today, you can maximize tax savings and boost your mortgage eligibility when it matters most.

Reach out now to craft a personalized strategy that works for your unique situation.

❓ Can I Get a Mortgage If I Owe CRA Taxes?

🛑 Not easily. Lenders may require you to:

• Clear your tax debt before approving a mortgage.
• Show proof of a repayment plan in good standing.

❓ Do You Need a T4 for a Mortgage?

👨‍💼 Not always. For self-employed Canadians:

• Lenders often accept T1 Generals, Notice of Assessments (NOA), and business financials.
• T4s are typically required for salaried employees, not entrepreneurs.

❓ Do I Need My Taxes Done to Get a Mortgage?

📂 Yes. Lenders need:

• Your two most recent years of filed tax returns.
• If you’re using business cash flow, they may request business financial statements instead.

We can help you navigate your options today!

Contact us to learn how we can help you navigate the mortgage process with confidence.