refinance /cash out tax implications

Financial Planning - Financial planning in general. (Moderated) 

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Subject Author Date refinance /cash out tax implications Sportsfan 02-09-2008  Re: refinance /cash out tax implications joetaxpayer 02-09-2008  Re: refinance /cash out tax implications-thanks Sportsfan 02-10-2008  Re: refinance /cash out tax implications-thanks joetaxpayer 02-10-2008
Posted by Sportsfan on February 9, 2008, 2:34 pm I'm planning to do a refi for about $120,000 and pull $30 or so in cash back. If I understand the new tax laws -- and I'm no expert-- $100,000 of home equity can be used for anything and a deduction is allowed. My total loan will be $120,000. Does that mean that I'll be$20,000 over the limit and have to prorate my mortgage interest deductions? I"m planning to use the cash back for home improvements. Just curious now. I"m seeing our accountant in a few days, but thought I'd see if anyone had a clue so I can consider my planning. Any thoughts or comments will be appreciated. Thanks -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by joetaxpayer on February 9, 2008, 3:59 pm Sportsfan wrote: > I'm planning to do a refi for about $120,000 and pull $30 or so in cash > back. > If I understand the new tax laws -- and I'm no expert-- $100,000 of home > equity can be used for anything and a deduction is allowed. > My total loan will be $120,000. > Does that mean that I'll be$20,000 over the limit and have to prorate my > mortgage interest deductions? > I"m planning to use the cash back for home improvements. > Just curious now. I"m seeing our accountant in a few days, but thought I'd > see if anyone had a clue so I can consider my planning. > Any thoughts or comments will be appreciated. You are borrowing only $30K over the current mortgage? And you're using it for home improvement? You have no issue at all. It's all deductible. Of course, the real benefit is only to the extent that this along with state tax, if any, and properly tax (this is most people's itemized deduction short list) exceed the standard education. I hope you went fixed and got a good rate. JOE www.blog.joetaxpayer.com -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by Sportsfan on February 10, 2008, 9:35 am Thanks for the quick response. It appears I'll have no problem with deducting interest. Sportsfan -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Posted by joetaxpayer on February 10, 2008, 10:47 am Sportsfan wrote: > Thanks for the quick response. It appears I'll have no problem with > deducting interest. > Sportsfan > You're most welcome. I am sorry my response was actually pretty short, as I am in the habit of citing a reliable source, to back up my info. This is that source: http://www.irs.gov/pub/irs-pdf/p936.pdf Knowing an answer off the top of my head doesn't let me off the hook. When you pull up that IRS Pub, page 9 pretty much covers your situation, and back up my original response that you were doubly covered as you described your intentions. JOE -------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup. Similar Threads Posted refinance should you claim ira savings ? February 5, 2008, 5:46 am Rental Property Refinance Tax Deduction February 19, 2007, 5:02 am Places to put cash February 11, 2007, 9:43 am Fed cash injection December 21, 2007, 3:28 pm Retirement Cash Out...How BIG a Hit ??? July 28, 2008, 4:01 pm "Cash" position within an IRA account April 5, 2007, 4:01 pm $12k gifts - cash vs 529 acct January 30, 2008, 5:16 pm ESOP payment into cash March 7, 2008, 5:05 am cash - for IRA, college, mortage, etc October 29, 2008, 4:20 pm Stashing cash monthly for 1 year February 21, 2008, 5:35 am