Thank you Carl! Let me read your notes first. And I REALLY APPRECIATE your help!!!   P.S. It is funny when you said that " You state that like you think you have a choice." I did think I have a choice!   It just every time you respond I can learn so many things! Thank you again!!   Chris ... View more

If you don't mind being on hold for a really long time, and pushing buttons that may never get you to a human, the IRS number is 1-800-TAX-1040 (800-829-1040). Good luck getting a human. Oh I remember now. I have called this number for another issue and it took 2 hours for a human. And she just asked me to read the publication.    Most questions relating to rentals I can answer. Thank you so much! Your abundant experience is definitely a huge asset to people like me. If I bother you please let me know! I just afraid to ask you too much and use your time too much. Regarding the CPA, you made a good point. I am in AR where income is heavily taxed and I may ask around for a local CPA first. Do you know how much do they usually charge? I know it is different and so many moving parts. Just want an idea about the consulting cost.   Additionally, in the tax year you sell you are required to recapture all depreciation taken on the property and pay taxes on it in that year of recapture. This brings my deep concerns about the depreciation. I am always afraid to claim depreciation on my tax return. Although I did, I am so worried when I sell my property it will come back and bite me. It just like an accumulated risk to me. I can't help to think about 10 years from now the majority of my houses are depreciated (I do 15 years loan) and the value of the houses goes up over time. When I quit being a landlord(not that I would, just saying) and sell these houses, I will suddenly have tens of thousands of income to pay taxes on.    About the cash-out money, I thought about it since you told me about the traceability is "EVERYTHING". What if I open a new saving/checking account and put the money there. I won't use that account to do anything except buying houses in the future. Do you think that's a good idea?       ... View more

Oh by the way, do you know if IRS can answer my question? Do they have a department to answer tax payer's question? If not, do you recommend any real estate CPA? I am a new landlord and lack experience when it comes to tax. You helped me a lot in this scenario! But I may have more questions to ask in the future. If you know any good CPA or IRS department would you mind referring? Thanks a million!!!  ... View more

Thank you again Carl! I think I got it!! But keeping the $65K check without putting in my saving account for months seems hard to do. IRS is not making it reasonable...I might just end up to forget about the benefit and not claiming it... ... View more

Thank you so much for your response! It is so knowledgeable and informative! I assure you I am not trying to avoid taxability. This is my first cash-out refinance and I have little knowledge about interest and tax-deductible. I used to think it might be a "grace period" since the 2 loans happened at the same time. My refinancing bank did a poor job and totally changed my financial goal. I didn't expect it took 5 months to close a loan. But it is what it is. I truly appreciate your helpful advice about not claiming it against the purchase loan at this time. It sounds pretty dangerous and I am not risking myself in that scenario. Thank you for the notice again.   I am actively looking to buy another property for investment. The market right now is pretty calm since most families want to stay through the holidays. But I do expect more supply will be available after Christmas. It just hard to define what is "reasonable". And hope my plan is reasonable. Maybe before March is reasonable? Wish I could find a rule from IRS, black and white, I am so afraid of uncertainty. But now makes it complicated since it may cross the year. If I pay $5,000 interest for my primary resident loan in 2021, and I know I cashed 65K in 2020 and $3,000 closing cost. If I use the 65K to buy a house for rental in Feb 2021, can I still claim 55% of the interest in 2021 as cost against this new rental? Should I calculate the cost proportionally, like $5,000x55%x10/12 since it will be in February? How would that affect my 2020 return and how should I claim the cost in 2021 for a refinance in 2020...? I am sorry I have asked you so many questions!!! ... View more

Thank you so much for your detailed response @Carl    I started the refinance in June 2020 and hoping to use the cash-out money as a downpayment for an investment that closes in late October 2020. I was confident that the refinance would be done before the purchase but I was wrong. The refinance was not done until November 2020. I end up using my savings to make the downpayment for the purchase. However, I started the refinance 3 months earlier than the purchase and my intention is to use the cash-out refinance for this investment.  Do you think I may still able to deduct the interest and fees against the rental?   If the answer is no, I am still planning to use the money to buy more rental. If I use 40K in December 2020, and 25K in March next year,  how should I do the calculation for tax-deductible against the rental income? I am not sure how to prove it that I use the 65K cash-out money for investment purpose and how to handle the timing when calculating the deductible taxes. Thank you so much for your time!!   ... View more

Thanks a lot. I was a little concern about the activity across the year that might be confusing to explain if I get an audit in the future. Do you know if I also need to put a stain concrete floor after closing, how many years should I depreciate the floor? Thank you!! ... View more