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Tax, SDIRAs & Cost Segregation

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Jake Kucheck
  • Residential Real Estate Agent
  • Costa Mesa, CA
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Cash Out Refi Tax Implications

Jake Kucheck
  • Residential Real Estate Agent
  • Costa Mesa, CA
Posted Dec 20 2008, 03:20

This is probably one of those things I should just go ahead and ask my CPA, but I thought I would see what the experts here thought first.

I was wondering if a cash out refi or massive home equity line could be used to shield an individual from capital gains tax upon sale. So in theory, if there was a ton of equity in a property, could they cash out just prior to selling, take the HELOC or Cash Out re-fi money tax free, and then sell to cover all liens on the property and have a much reduced "profit" from sale, so much so that they wouldn't owe any capital gains. Are there pre-payment penalties or other clauses that would prevent this? Please chime in with useful info on this topic.

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