The real estate market is tough in most parts of the nation, but that’s no excuse for either a buyer or seller to fudge on a home-sale contract or mortgage application.

Q: We want to buy a home while prices are still down, but it would take every cent we have just to make a 3 percent or 5 percent down payment. The owner of a home that we really like has offered to sell us her property for $10,000 above its asking price, but then write us a check for $15,000 when the deal is completed. This seems like a great strategy, because the seller would be able to get $10,000 more than she expected, and we would get $5,000 in extra cash to cover our move-in expenses. What do you think of this plan?

A: Not much. Unlike in years past, most lenders are now scrutinizing every mortgage application they get and want to know every detail about a proposed sale. If you fully disclose the proposed terms of the deal to your loan officer, your application is almost certainly going to be rejected because you’d be getting “cash back” from the deal. If you instead shade the truth to get the loan, the government’s recent crackdown on loan fraud could cost you thousands of dollars in fines or maybe even put you in jail.

Even if you tried to fool the bank, a good appraiser would realize that you’re offering to pay about $10,000 more than the home’s current market value – meaning that the loan would automatically be declined.

A better alternative would be to ask the seller to cut $10,000 or $15,000 off of her selling price or (better still) ask her to pay a similar amount to cover your up-front loan points and other closing costs. By putting such an agreement in writing, the lender will be able to judge your loan application based on all the facts, and you won’t have to worry about doing anything that’s dishonest or illegal.

Should the bank eventually deny your mortgage request, it’s a hint that you should either search for a less-expensive home or spend more time saving to make a larger down payment on the next home you want to buy.

Q: We spent about $20,000 to remodel our kitchen and bathroom three years ago. We did all of the work ourselves and saved all of the receipts for our materials and supplies. We estimate that we spent a combined 350 hours on the project, and now we are ready to sell. Can we take a deduction for the time we spent on the work to reduce any possible taxes on the resale profit?

A: You can add the $20,000 you spent on materials to the cost basis of your home to reduce any potential taxes, but the Internal Revenue Service will not let you take an additional deduction for the time spent actually performing the work itself.

There are three main reasons why the IRS won’t let do-it-yourselfers take a deduction for the time they spend remodeling their home. First, even if taxpayers kept detailed records of the hours of work performed, it would be virtually impossible for the agency to verify or disprove the claims if their income-tax return was later audited. Second, placing an actual dollar value on a DIYer’s time would be extremely difficult: It wouldn’t be fair if the government allowed a high-priced lawyer to deduct $350 for each hour he worked on his home, but only provided a $9-per-hour deduction for a woman who barely makes minimum wage at the local gas station or convenience store.

Finally, providing writeoffs for self-made home improvements could conceivably discriminate against blue-collar workers who simply don’t have the money it would take to remodel their property. For example, it would be unfair for the IRS to provide such a deduction to a wealthy homeowner who has both the cash and time it would take to install his own personal gym at a time when many other owners are working two jobs and barely have enough money to buy a bucket of paint.