One of those Youtube guru's advice....

[Curtis Cecil]

So let me give you some hypothetical numbers.

I buy a house for $150k. Current value is $210k as-is. ARV is around $300-$350k. So I was told that I could do a cash out refi for $150k. That puts debt against the house. I can use the funds to renovate the house and use left over to buy another house. Once I make the renovations and list the house for sale. Let's say it sells for $300k for numbers sake.

Since I have a loan that loan has to be paid off. Loan gets paid off and that leaves me $150k, the original purchase price of the house. So since I had a loan that needed to be paid and I just got my original monies back there's no profit, thus no taxes to be paid....

Is that correct? I know about 1031 exchanges to avoid taxes but not getting a loan against the house to prevent profits.... 

[Nick Maugeri]

Quote from @Curtis Cecil:

So let me give you some hypothetical numbers.

I buy a house for $150k. Current value is $210k as-is. ARV is around $300-$350k. So I was told that I could do a cash out refi for $150k. That puts debt against the house. I can use the funds to renovate the house and use left over to buy another house. Once I make the renovations and list the house for sale. Let's say it sells for $300k for numbers sake.

Since I have a loan that loan has to be paid off. Loan gets paid off and that leaves me $150k, the original purchase price of the house. So since I had a loan that needed to be paid and I just got my original monies back there's no profit, thus no taxes to be paid....

Is that correct? I know about 1031 exchanges to avoid taxes but not getting a loan against the house to prevent profits.... 

$150K cash purchase

Refi at 75% LTV of appraised value, $210K = new loan at $157,500. No debt means that's $157,500 non-taxable to you. Renovations cost $50K. Your funds in are (loan) $157,500 + (rehab) $50K = $207,500. You sell at $300K; less $207,500 + 8% selling fees ($24K) = $231,500. Your taxable gain (based on income) would be $68,500 at averaged (13%) = $8,905

I'm not a CPA, but this is a rough understanding of your position - hoping someone destroys this breakdown. 

[Chris Seveney]

Quote from @Curtis Cecil:

So let me give you some hypothetical numbers.

I buy a house for $150k. Current value is $210k as-is. ARV is around $300-$350k. So I was told that I could do a cash out refi for $150k. That puts debt against the house. I can use the funds to renovate the house and use left over to buy another house. Once I make the renovations and list the house for sale. Let's say it sells for $300k for numbers sake.

Since I have a loan that loan has to be paid off. Loan gets paid off and that leaves me $150k, the original purchase price of the house. So since I had a loan that needed to be paid and I just got my original monies back there's no profit, thus no taxes to be paid....

Is that correct? I know about 1031 exchanges to avoid taxes but not getting a loan against the house to prevent profits.... 

Umm. No that is not correct unless you want to commit fraud.
Lets say you buy a home for $150k cash. Lets say you take out $150k loan against it and spend $25k improving the property and the other $125k on another property. Your basis is $175k not $300k.

The amount of loans you get on a home have nothing to do with taxes you pay/ larger loan = less basis. Who was this genius guru?

[Curtis Cecil]

Quote from @Chris Seveney:

Quote from @Curtis Cecil:

So let me give you some hypothetical numbers.

I buy a house for $150k. Current value is $210k as-is. ARV is around $300-$350k. So I was told that I could do a cash out refi for $150k. That puts debt against the house. I can use the funds to renovate the house and use left over to buy another house. Once I make the renovations and list the house for sale. Let's say it sells for $300k for numbers sake.

Since I have a loan that loan has to be paid off. Loan gets paid off and that leaves me $150k, the original purchase price of the house. So since I had a loan that needed to be paid and I just got my original monies back there's no profit, thus no taxes to be paid....

Is that correct? I know about 1031 exchanges to avoid taxes but not getting a loan against the house to prevent profits.... 

Umm. No that is not correct unless you want to commit fraud.
Lets say you buy a home for $150k cash. Lets say you take out $150k loan against it and spend $25k improving the property and the other $125k on another property. Your basis is $175k not $300k.

The amount of loans you get on a home have nothing to do with taxes you pay/ larger loan = less basis. Who was this genius guru?

 It was a short by karlton dennis, tax strategist

[Don Konipol]

Quote from @Curtis Cecil:

Quote from @Chris Seveney:

Quote from @Curtis Cecil:

So let me give you some hypothetical numbers.

I buy a house for $150k. Current value is $210k as-is. ARV is around $300-$350k. So I was told that I could do a cash out refi for $150k. That puts debt against the house. I can use the funds to renovate the house and use left over to buy another house. Once I make the renovations and list the house for sale. Let's say it sells for $300k for numbers sake.

Since I have a loan that loan has to be paid off. Loan gets paid off and that leaves me $150k, the original purchase price of the house. So since I had a loan that needed to be paid and I just got my original monies back there's no profit, thus no taxes to be paid....

Is that correct? I know about 1031 exchanges to avoid taxes but not getting a loan against the house to prevent profits.... 

Umm. No that is not correct unless you want to commit fraud.
Lets say you buy a home for $150k cash. Lets say you take out $150k loan against it and spend $25k improving the property and the other $125k on another property. Your basis is $175k not $300k.

The amount of loans you get on a home have nothing to do with taxes you pay/ larger loan = less basis. Who was this genius guru?

 It was a short by karlton dennis, tax strategist

You probably misunderstood the video information.  Taking cash out by way of a new mortgage is not a taxable event.  Doing a 1031 exchange (properly) delays and defers and capital gain tax due, but carries over your tax basis to the new property.  A “sale” of a property (versus an exchange of like property) is a taxable event.