Second Mortgage

What is the name of your state? FL

I currently have 50K worth of equity in my house, and have 10K of credit card bills I\d like to pay off. I\ve owned the house for 2 years. I plan on selling the house in the next two months due to a job relocation. Should I take out a second mortgage to pay off the cc bills prior to selling the house, or just sell the house and use the proceeds to pay the cc bills? Will I have to pay capital gains tax on any of the proceeds from the sale of the house (either the 10K or the 50K).

[abezon]

1. You can exclude up tp $250,000 of gain on the house under sec. 125, Sale of Primary Residence. If you've been using any of the house as a home office, the calculation gets trickier.

2. Will taking out an equity loan be cheaper than the interest you'll pay until the house is sold? Don't forget to consider equity loan fees, appraisal, etc. Are you sure the house will sell in 2 months or might it linger on the market?

3. After you pay off your cards, either don't run them up that high, or pay them off with a second mortgage earlier. That way you can deduct the interest on Sch.A. Same goes for car loans - finance through a home equity loan rather than a car loan.