cash out refinance investment property? any tax implication?

[Lilly Fang]

I have a rental (market value close to 400K) with 100k mortgage left. I don't want to sell it right now, but want to get some cash out of it. Can I do cash out refinance on this? Is there any tax problem now or when I sell it in the future? If I do 1031 exchange in the future, will the tax be deferred too? Thanks.

[Alex Olson]

@Lilly Fang Cash out refi- there are no tax implications. It is not considered income because you will be paying on your equity that you take out in the form of a loan against your property. Just make sure you pay it back - but it is not taxed! 1031 Exchange - you can 1031 exchange into another like kind property (virtually any piece of real estate including land) in which your taxes on the property are deferred to when you finally sell without exchanging (or gift to your family - in which case you nor they every pay taxes on it). So, hopefully you can see that your rental is an awesome piece of wealth generation. Hope this helps.