2007-03-09 04:13:46 · 9 answers · asked by royboogie 2 in Business & Finance ➔ Renting & Real Estate
No, taking equity from a refinance is not a taxable event.
Only when you sell the home would you be liable for taxes, and even then, as long as you've lived in that home as your primary residence for 2 of the past 5 years, your first $250K (single) or $500K (if married) in GAINS is tax-free.
So, unless you are making some serious, serious gains in appreciation on that home, you'll never have to worry about paying taxes on that money.
Enjoy, but spend it wisely. :)
2007-03-09 04:39:10 · answer #1 · answered by Yanswersmonitorsarenazis 5 · 0⤊ 0⤋
No.
The cash is not income. It is like taking money out of your savings account. You pulled cash out of a property you owned. Money that is received as proceeds from a loan is not taxable (car loans are not taxable for example).
When you earn the income to pay back the loan you will pay tax on the income.
Do be warned that if you later sell and you have been pulling out profits when you refinanced you will pay tax on the gains even if you do not get the cash at closing.
If you work through the math it all makes sense but it sometimes is not that obvious.
2007-03-09 04:24:17 · answer #2 · answered by Anonymous · 0⤊ 0⤋
No, it's not a paycheck. It is equity in something that you have already paid for so it's basically like withdrawing money from a savings account.
2007-03-09 04:43:53 · answer #3 · answered by dusmul78 4 · 0⤊ 0⤋
No, because you didn't get anything.
However, when you sell, you need to take into account the equity you received (if it wasn't simply a loan).
2007-03-09 04:22:47 · answer #4 · answered by Jay 7 · 0⤊ 0⤋
No. That's not income. You just borrowed that money using the house as collateral and you have to pay it back (via mortgage payments).
2007-03-09 04:26:41 · answer #5 · answered by Dave W 6 · 0⤊ 0⤋
nope!!! All the paperwork shows that its in the loan you took out and no taxes have to be paid. Wonderful isn't it.
2007-03-09 04:18:02 · answer #6 · answered by danczar1 2 · 0⤊ 0⤋
You not only don't pay taxes on it, you don't even report it to the IRS.
2007-03-09 04:23:24 · answer #7 · answered by open4one 7 · 0⤊ 0⤋
No, you lucky dog! Congrats and invest that money wisely!
2007-03-09 04:22:20 · answer #8 · answered by Lil' Gay Monster 7 · 0⤊ 0⤋
no
2007-03-09 04:17:32 · answer #9 · answered by golferwhoworks 7 · 0⤊ 0⤋