Home Equity Loan
How does doing a cashout refi or home equity loan affect AMT risk?
We will be remodeling/adding on to our home and want to do a cashout on the first mortgage (of around $60,000) and then do a 2nd (Equity loan) for the rest...does doing this put us at greater risk for having to pay AMT taxes and if so, in what way (which lines in the 1040 or 6251 affect this)? Is there a better approach we could take?
Public Comments
- you will not be taxed on any loan amounts...if you hold that money in the bank, the interest it may earn is taxable though. a loan is not income....you have to pay it back....it will not become income even if you buy a car with it. but if you buy a car with it, the interest you pay on it is not deductable.
- The risk is that you must keep very careful track of your loans. Any money from a refi/2nd that *isn't* used to improve your home is added back to your income for AMT purposes.
