Posted by DavidV on November 14, 2000 at 14:24:02:

Actually your assumption is the same as the poster’s. Not sure of the question he was replying to but it was probably something like " If i buy a property for 60k and put 10k in it my basis is 70k. If i refi for 80k is 80k my new basis and is the difference of 70k and 80k free money"? The poster is merely pointing out that a refi doesn’t change the basis, try re-reading the post with the hypothetical question above, i’m sure it is close to the original questin. If it’s not close i’ll e-mail you an official disclaimer with a lot of lawyer words. :slight_smile:


Posted by cHRIS on November 14, 2000 at 13:55:53:

Hello there:

W H A T I S T H I S ???

I just found these statements on a post:

"What you observed is an important point: one of the largest single costs, if not THE largest single cost, in a rehab is the taxes when you sell. Refinancing avoids this cost…

“Further, if you DO sell the property after a refi, your basis hasn?t changed eventhough you have borrowed in excess of the basis?.meaning TAXES will continue to be calculated in reference to the basis, and without regard to the amount you borrowed. Clearly you can imagine a scenario in which your tax obligation exceeds the amount of remaining equity in your deal. I suppose you could sum this all up by saying that borrowed money is just that?.it may be ?tax-free? for the moment, but it does have to be paid back?.so it?s not ?free money?.”

In reviewing the above statements, isn’t it true that the basis of the REHAB is WHAT THE GENTLEMAN PAID FOR THE PROPERTY PLUS REHAB COSTS??? IT SOUNDS TO ME LIKE THE POSTER MISSED THAT