2006-06-14 06:00:22 · 7 answers · asked by mikey b 1 in Business & Finance ➔ Taxes ➔ United States
Generally speaking, the money borrowed (even if taken as cash) is not taxable. There is not a gain since the amount borrowed is owed back to the bank. Where it will come in to play is when the house is sold. Profit will be Sell Price - (Purchase Price + Improvements). Money borrowed against the equity does not enter in to the equation.
If the house is your primary residence (or meets other criteria) you can sell the house and exempt a large part of the gain from the sale.
Every situation is different, so you should read the tax instructions and see how they apply to your situation.
2006-06-14 06:11:24 · answer #1 · answered by davidmi711 7 · 0⤊ 0⤋
Cash received from refinancing your home is not taxable income. You would pay capital gains on the sale of a home when it is either investment property and you made a profit or if you had not lived in the home the last 2 out of the five years you have owned it AND you made more than a $250,000 profit if filing single or $500,000 if married filing a joint return.
2006-06-19 15:55:55 · answer #2 · answered by lade40free 2 · 0⤊ 0⤋
The 30k is tax free and the interest on the additional debt is tax deductible, assuming the debt is not more than the Fair market value of the property. The CG are paid when the property is sold, assuming you exceed the threshold. The debt will not come into play in calculating the gain. It is selling price less purchade price less cost to sell (agent fees etc)
2006-06-14 07:59:18 · answer #3 · answered by extra_37 4 · 0⤊ 0⤋
Technically it shouldn't be, as you haven't sold the property. As with many investments, you don't pay capital gains until you sell the investment. In a way, you are only borrowing against the asset you own. You added to the amount of your mortgage, and therefore, you only received a loan.
I would double check this with your CPA, but I say no.
2006-06-14 06:06:54 · answer #4 · answered by heidiinphilly 2 · 0⤊ 0⤋
I agree with the answers that technically you only recieved a loan against the value of your home which you haven't sold. And if you have lived in your home for a number of years the first $250,000 of PROFITS from the sale of your home are tax-free, $500,000 if you're file jointly with a spouse. Nice to know eh?
2006-06-14 11:12:42 · answer #5 · answered by Sugarbear 3 · 0⤊ 0⤋
I would say that if you did not transfer the property out of your name then it is effectively a loan. When you sell the property you will pay taxes on the difference between what you paid for it and what you sold it for; not on how much is left after you pay the bank.
2006-06-18 16:11:39 · answer #6 · answered by Paul t 1 · 0⤊ 0⤋
completely authentic, i found out as quickly as I left living house for greater then basically a month or 2.. there is particularly no such place which could make you sense like living house different than your place of origin or united states of america.
2016-12-08 20:41:47 · answer #7 · answered by ? 4 · 0⤊ 0⤋