Will real estate depreciation impact cashout refi

Member since 2022 · 18 posts · 21 votes

Hi, I am looking to do cash out refi for one of my properties. However, my other properties will depreciate for tax purpose, therefore I have paper loss, but I still cashflow on those. My question is will such paper loss impact the cash out refi process?

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Michael PlaksPro Member
Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
1y
Quote from @Zeliang Zheng:

Hi, I am looking to do cash out refi for one of my properties. However, my other properties will depreciate for tax purpose, therefore I have paper loss, but I still cashflow on those. My question is will such paper loss impact the cash out refi process?

For underwriting purposes, lenders add back all depreciation. So depreciation does not affect your borrowing eligibility, however most other business expenses do.
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Natalie KolodijBusiness Member
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Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
1y
Lenders will typically add back depreciation, one-off large expenses, etc.

The best way to confirm is to discuss with the lender exactly for their specific underwriting.
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