Will my property tax change if I refinance?

Does Refinancing Change my Property Taxes?

Property Tax has assessed the state and its trend generally has been inclining so it wouldn’t remain the same. However, it’s a common question in the mind of the borrower that if they go for refinancing and they get a higher appraised value. Would that also mean a higher property tax being levied?

Well, it's not the case. The state and the county have their own method of assessing property taxes which has nothing to do with a higher appraised value. Based on the expenses and budgeting of the state and for the county really what matters as to what the property tax would be in the years to come.

Will Refinancing Cause My Property Taxes to Go Up?

Is cash out refinance taxed?

Cash out refinance occurs when a borrower borrows money out of the equity built in the home. In other words. I have a house worth $ 800,000 and my current mortgage is $ 400,000 and I need a cash out, be it any purpose for an amount of $ 100,000. 

This cashout amount of $ 100,000 is coming out from an asset component that is my house. The overall picture of my asset and liability is the same. This no new source of income but a mere change in asset classification. This $ 100,000 was originally an asset class being part of my home asset value and from home, the asset value is now being changed into Liability value. 

So there is no income. Hence it will not be taxed.

Taxes and Interest

On My primary home. The amount that I spend on interest every year is tax deductible. The same rule applies each time I refinance my home and even on my second mortgage. Whatever interest I incur is tax deductible. So if you pulled cash out and spent the money on renovating your home. You can write off the interest portion of the mortgage up to a max of $ 1 MIL of debt. 

If I took cash and did not make any home renovations but used for any other purpose, I can still write off interest portion up to a maximum of $ 100,000 of debt.

Mortgage Insurance is Tax Deductible

Borrowers end up paying mortgage insurance for various reasons. Perhaps they paid less than 20% as a down payment which attracted mortgage insurance. If they have an FHA Loan. Mortgage insurance is almost mandatory in all cases.

This mortgage insurance you pay each month is tax deductible. This, however, requires that you fall in certain income limit category based on whether you file your taxes jointly or individually.

Investment property 

In case of investment property. This is classified as into business class. Here there is no limitation whatsoever on how much interest you would like to write off against your rental income regardless of what you do with the money on your loan.

The second, there is no exclusion from capital gains.

For more information visit www.affordable-payment.com or Call 323-705-3191 if you are a California Mortgage Borrower or If Texas Mortgage Borrower call 713-463-5181 EXT 154