LLC Cash Out Refinance

[Jonathan Carrera]

1. LLC treated as partnership

2. LLC bought a residential real estate property for $60,000 January 1, 2018 and the property has increased in value $100,000

3. LLC wants to do cash out refinance with a new mortgage of $80,000 ( 80% of $100,000 )

4. LLC has taken two year depreciation as following: 2018=$2,182 and 2019=$2,182 where ($60,000/27.5 years = $2,182 and for this example assume land value which is non-depreciable is already taken out of the property sale value)

5. Property basis is $60,000-$2,182-$2,182=$55,636

6. Does the property basis increase due the new mortgage of $80,000 ??