Cash Out Refi Tax Implications

[Robert Sapienza]

Question for the veteran or financial expert of the bigger pocket community.

My RE partner and I had our first big success in the BRRR method in the past month. My question revolves around taxes owed. Here are the round numbers. Any advice would be greatly appreciated.

Commercial property bought under an LLC for an all in cost of 290k. Appraisal came back at 660k. 75% loan gave us a mortgage of 495k. Money owed back to our line of credit is 290k.

495k minus 290k leaves us with 205k cash left over from our cash out refi. That money is sitting in our business account. I believe it’s not taxable because it’s not income it’s debt to the business, but what happens if we take the money personally. Does it then become income and taxable?

DISCLAIMER*** I am not looking for advice on what do to with the left over money. Not looking for investing strategies of how I can roll the 205k into something else. I am asking if that 205k leaves the business account and comes to us personally does it then become taxable.