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Old 06-16-2005, 04:20 PM
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Home Equity Loan taxable on home sales

CA - I have a home equity loan and a first mortage, upon the sale of my home, will the home equity line go towards the cost of my home? Assuming I can make over 500K, any additional money that I make beyond that would be taxable. Will I be able to decrease my taxable income if my equity line gets added to what I paid for the home? Is it a better idea to lump my current equity loan into a new first mortgage prior to the sale of my home?
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Old 06-17-2005, 12:40 PM
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Join Date: Mar 2005
Location: Maryland
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don't confuse debt with cost.

you could have borrowed agianst your home's equity to fund the next blockbuster movie , those funds did not go into the house.

it looks like you're trying to determine the "tax basis" or "cost basis" of your home to determine the gain upon sale. your "costs" would included purchase price (incl. closing costs), improvements, additions, maybe a deferred gain from a previous sale under old tax laws. net those numbers & that's your costs basis.

note that any amount borrowed wasn't even mentioned above !
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