Cashout refi taxable

[Tommy Sowell]

Hello I’m refinancing a San Diego property and paying off a loan on aHawaii property and my question is the cash out taxable since it’s a loan?

Thank you

Tommy

[Dan H.]

Originally posted by @Cody L.:

Originally posted by @Tommy Sowell:

Hello I’m refinancing a San Diego property and paying off a loan on aHawaii property and my question is the cash out taxable since it’s a loan?

Thank you

Tommy

 Nope. God bless America. 

Buy something for $1m. Get the value up to $2m. Sell it and you have $1m taxable income. But refi and pull it out and it’s tax free (and interest is deductible). 

Refinance taking out millions and do not pay any taxes at the time of taking the money out.

Then if you die, your children get the property on a stepped up basis (readjustment of the value of an appreciated asset for tax purposes upon inheritance) and there is never a tax on the money extracted.

Or if you need to sell it while still alive, 1031 Exchange the appreciation on to another property/properties. For example, someone with 20 or so units in small unit RE (similar to me) decides they want something that is more hands off so they 1031 exchange it into something like a apartment building with an onsite PM or into a NNN commercial property. Then they die and their children get the property/properties on a stepped up basis.

My goal is to never pay taxes on the appreciation of my RE.  Furthermore, it is my goal that my child never pay taxes on the money I have extracted from the appreciation of my RE.

It seems almost too good to be true...