However, once you start renting it out, those renovation expenses could be added to your cost basis, potentially lowering capital gains taxes when you sell.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $720,000

Cash invested: $463,183

Sale price: $751,100

Using your own funds to pay down your loan so you get a bigger loan sounds like a zero sum gain (aka IE using 1 dollar to pay down loan so you can net 1 more dollar from the new proposed loan) So how are you going to net more cash when spending 1 dollar to get another 1 dollar ?

Fortunately, you will be able to to a 1033 exchange into new property and avoid any tax on the gain. 

Plus to realize that appreciation it costs you money to sell, refinance, and potentially pay taxes on the gain. 

If you live in the property for at least two years, you can sell it without paying ANY capital gains tax (unlike traditional flipping).We've done this a few times, but almost every time, we end up keeping the home as a rental.

The money from a refinance isn’t considered taxable income because it’s a loan, not a sale or gain.

Does the person have something to gain from their answer?

I think I’m more focused on long term gain, some short term cash flow is nice but I’m not planning to try and live on it or anything.

Hey Brandon - I see this post is from a while back but getting some traction again.