What are the consequences of a cashout refi on an investment prop

[Eric Cybulski]

Here is the situation. I have an investment property worth about 150k and a loan for slightly less than 50k. The property is currently financed at 5.125% int rate.  I am considering doing a refi to lower the rate and pull out some equity as well.  My question is how does the cash out work for tax purposes if the property is considered investment for the following situations?  1) If the cash out is used to improve the property?  2) Use the cash to purchase another investment property?  3) Use the money for something else, like a vacation, car, or going to Las Vegas?  4) Down the road if I were to do a 1031 exchange to purchase a larger property would this event matter?

Eric

[Carl Fischer]

@Eric Cybulski

It works out great for any of the reasons you mentioned. No significant tax consequences -it’s a loan. However my father taught me only to borrow to make money not go on vacation. Seemed to be good advice. Enjoy the cash flow. I like equity lines in this financial environment.