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Cash-Out Refinance |
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I currently own a home (in Southern California) for the last 15 yrs, and was interested in buying into a larger home for my growing family.
Given the softening market, I was considering renting my current home, and then doing a cash out refi to use as down-payment on the new home that I will be purchasing.
When I do decide to sell my first home (say after 2-3 yrs), will I be able to get the a tax exemption on the capital gains ? Or would it more advantageous from a tax perspective, to first sell the current home before purchasing the next ? |
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First off, there's no need to worry about the softening market, because if you buy and sell in the same market, what you lose on one end you make up on the other.
Second, I doubt you'll have much luck looking for a cash-out refinance in today's horrendous mortgage situation.
Third, you can use the homesellers exclusion on your profit if you sell within three years of leaving your home. You must have owned and occupied it for at least two of the five years before the sale. You could even have rented it out in the meantime. |
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Edith
Originally published on February 1, 2008 |
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