Question by jewel: Do I need to report the equity “cash out” from mortgage refinance as income?
I do my own taxes every year, but this year I have a question. I refinanced my mortgage in the spring. Had a significant amount of equity and decided to “cash out” some of my equity to help pay off some outstanding debts (car, student loan, credit card balance) and kept some to keep in saving (so it’s accessible, if needed). I know the government tries to take a piece of everything, but this is MY money. It’s not “wages” — does that make a difference?
Answer by M H
You report equity on your home when you sell it. Then, you subtract your total costs from your home from the selling price to figure your profit on the sale. If you are single and have owned your home for two years or more, the first $ 250,000 is not taxable income. If you are married, the first $ 500,000 of profit is not. Any amount above and beyond that amount or if you have not lived in your home as your primary residence for more than two years, all profit is deductible.
Give your answer to this question below!