Capital Gains orn Refinanced Properties??

[Account Closed]

simple tax question here...if i buy a property and a rehab it, and i'm all in for 200k, refi it and pull out 100k more, and then firesale at 300k, do i owe capital gains or is it a breakeven? something i'm missing here? id prefer if this discussion doesn't get into banks, appraisals, etc. so, for the sake of this thread, let's assume i have a private lender and getting the equity out is no problem....thoughts? thanks

[J Scott]

I think I understand your question...

The refi should have no impact on your tax burden (ignoring write-offs for loan costs and mortgage interest). So, if your all-in costs were $200K (your basis) and you sold for $300K, your gain would be $100K, and that's what you'd owe tax on.

Btw, as this example proves, a cash-out refi is a great way to liquidate equity without incurring a tax burden (at least not until you sell).