Can you depreciate the money from a home equity loan on a rental property?
Posted in Renting & Real Estate on 01/18/2009 02:28 pm by admin
Celeste C asked:
If your property has appreciated in value and you elect to take out a new mortgage, thereby getting cash out, is the cash depreciable on income tax returns, even if spent on a vacation? I’ve been told that you can do this and know two people who have done it and say it’s legal. For instance, you take out a new mortgage for $80,000.00, the mortgage company pays off the old mortgage of $60,000 and you get the $20,000. as cash. You don’t have to show receipts because you simply have a mortgage which I think can be used as cost basis for depreciation. Is this true?
CRAIG
If your property has appreciated in value and you elect to take out a new mortgage, thereby getting cash out, is the cash depreciable on income tax returns, even if spent on a vacation? I’ve been told that you can do this and know two people who have done it and say it’s legal. For instance, you take out a new mortgage for $80,000.00, the mortgage company pays off the old mortgage of $60,000 and you get the $20,000. as cash. You don’t have to show receipts because you simply have a mortgage which I think can be used as cost basis for depreciation. Is this true?
CRAIG