Do I have to pay Capitol Gains tax on a Cash Out Refinance of a rental property? I used some of the cash out portion to payoff Home Equity Loan on a second residence and some for improvements on rental. Where on Turbo Tax schedule E do you report Cash out refinance
You pay cap gains in the profit on the sale...a motgage payoff is not taken into consideration at all. Think of it this way...you got some of the profit in advance when you refinanced to take equity out of the home and you were not taxes then so you are taxes now.
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