FAQs About Trading In Your Home's Equity For Cash

7. If I Am Taking Cash Out When Refinancing Will I Suffer In Regard To My Taxes? No, you will benefit handsomely if you study the rules and follow them closely. You must be using those funds to eliminate debts that do not already have deductions associated with them.

The IRS will allow you to deduct the interest on amounts taken, up to $100,000, against your principal residence in addition to the original debt used to purchase the property. Check the IRS Publication 936 - Home Mortgage Interest Deduction for more explicit details and to be certain the rules have not been changed. Always be certain that the information that you are accessing to make these decisions is from an official and updated government source.

By your possibly being able to refinance other debts, which may be at a higher interest rates than rates available on a second lien, you are allowed to receive a tax benefit by deducting the interest on the loan, which in effect, let's the government pick up part of the tab on the loan repayment.

The final point to address here is this. You are permitted to remain in your current home which you may have felt you would have had to otherwise sell to cash out. The rules are not the same for rental properties however, so investigate fully all aspects and do not leave out any details, even the ones that may seem small and of no consequence. The language of the rules and regulations is very specific and it all needs to be understood.

< Back 1 2 3 4

Print Page