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Level 5
March 19, 2021
Question

Cash Out Refi

  • March 19, 2021
  • 2 replies
  • 15 views

We completed a cash out refi on a rental home in Texas and took money out to put down towards a new home in California.   But this means this is an additional loan that we have to pay back to the bank anyway.  Would the money we took out be considered income?  Is there a time limit of how long we have before it can be considered income?

    2 replies

    Level 13
    March 21, 2021

    No, cash-out proceeds from a refinance are not considered "income" - it is just money you borrowed and have to pay back. 

     

    (Since the cash you borrowed is not taxable income, you cannot claim a deduction when you pay it back)

    Level 5
    March 23, 2021

    Thank you!