What if you sell a Brrrr

[Robert Freeborn]

Hi BP!

I've been studying alot about the Brrrr strategy.  There is a house here that I definitely want to move on, but I'm curious about the after part. 

What I haven't been able to discover is how taxes will factor in.

Obviously, you don't pay taxes on the refinance part, since that is technically loan money. But what about if you were to sell 6 months later? You'd have very little equity, and therefore very little profit from the actual sale.

Here is where I'm unsure: wold you pay taxes on the little bit of equity that you gained between the refinance and the sale, or would you pay it on the difference between the original purchase price and the final sale.

Thank you!

[Brandon Hall]

@Robert Freeborn equity does not equate to gain. Many people mistake this as they think the cash they receive should be the gain, however this is rarely the case with real estate.

Capital Gain/Loss = Selling Price - [Purchase Price + Improvement Costs - Depreciation]