Question

Cash out rental property

Forum|Forum|6 years ago
June 26, 2019
1 reply
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Based on the proposed Tax Reform with the substantial increase of the Standard deduction would it make more sense to refinance my investment properties as a cash out and payoff the mortgage on my primary residence?

TurboTax Business Windows

A

Anonymous_

Employee

@kkpatel wrote:
Based on the proposed Tax Reform with the substantial increase of the Standard deduction would it make more sense to refinance my investment properties as a cash out and payoff the mortgage on my primary residence?

Your question has implications and considerations beyond income taxation.

For example, you will most likely be facing anywhere from a 25 to 75 basis point increase in your mortgage interest rate on your rental properties than on your (owner-occupied) residence.

You have to do the math in order to determine whether the decrease in income tax liability is greater than the increased interest expense as a result of the higher rate.