HELOC and Capital Gains tax
Hello BP!
Question on Capital Gains tax.
Scenario. We took out Home Equity loan for 100K on my primary residence. We used this money to buy a rental property at 400K. The plan is to keep this property for 3 years and sell it. I'm hopeful with value appreciation at 5%, sale price should be over 450K.
HELOC = 100k
Purchase =400k
Sale = 450.
Closing cost = at 6% = 27k
Profit = 450-27 = 423 - outstanding mortgage 290k = 133k. So the question is am I taxed on 133k or on 33k when I pay HELOC back?