patrick.net

GNL says

Eman says

Rent seeking or not, he also gets a pension. Is pension also a form of rent seeking?

Haha, did I hear uncle Sam (you and I) are paying Ukraine's pensions?

No, they are being paid from the $350B in Soviet assets.

Bitcoiner says

Yeah, starting a new account and using “Bitcoiner” instead of my previous name “bitcoin” is pretending to be someone else. I even used the same profile pic. LOL, thank you for the laugh.

That account only goes back a few more years. Interesting that when I search Logan and try to click on his user name, I'm not directed to his account page. I guess it's been wiped? Would like to correlate Logan's last known account with yours, I still think it's you Logan. But no matter which version, we still see through you.

You know who else is on TV, Biden. Fauci too. You wanna impress me, start an independent news site. TV is for entertainment and brainwashing, guess which one is Logan...

RWSGFY says

GNL says

Eman says

Rent seeking or not, he also gets a pension. Is pension also a form of rent seeking?

Haha, did I hear uncle Sam (you and I) are paying Ukraine's pensions?

No, they are being paid from the $350B in Soviet assets.

Yeah, ok.

GNL says

RWSGFY says

GNL says

Eman says

Rent seeking or not, he also gets a pension. Is pension also a form of rent seeking?

Haha, did I hear uncle Sam (you and I) are paying Ukraine's pensions?

No, they are being paid from the $350B in Soviet assets.

Yeah, ok.

Glad I relieved your worries on the matter.

Eman says

Not my farm so I can’t comment on its location. Just like anything in life, have to kiss a lot of frogs before I find my princess. Good deals rarely make it to the market.

One thing I’ve learned is that there are more wear and tear on lower end properties. Everything in life has a price. There’s a reason why something is cheap and not selling.

I'm no expert but looking at the numbers provided on the Redfin site this does not look like "cash your IRA and quit your W2" kinda deal. With estimated monthly payment of $10,424 and annual gross income of $130,056 what's left at the end of the day - $5K per year? How many of $300Ks your average under-40 tech worker can cash out of their IRA? Maybe 2. Maybe. So $10K per year and dealing with tenants, toilets and all that jazz...

1337irr says

GNL says

Some unsolicited advice: be careful how you "think" you are helping your family. I'm sure almost everyone can attest to the horrible results $$ has had on friends and loved ones. My son in law is part of a family that owns about a billion dollars worth of real estate. My 2 grandkids already own part of the family REIT. I am quite worried how they will end up. Seriously.

Wealth can be destroyed in a generation or less. Assets that produce cash flow can be sold by people who don't know what they are doing but just inherited the estate.

This happens often in real estate. These are some of the best purchases. Parents buy income producing assets in their prime age, around 40’s. Once they’re retired, they either sell and 1031 exchange it into a NNN for income, or they’ll keep it until they die. The kids inherit the assets, get a stepped up in basis, sell and walk away with money tax-free. This is the reason why multifamily tends to get sold every generation.

https://redf.in/ckKM1z, my buddy bought this building 1.5 years ago. The listing agent helped the buyer buy this building 35 years ago for $650k. Now that the seller is ready to 1031 exchange into a NNN, he got to list it.

Eric Holder says

Eman says

Not my farm so I can’t comment on its location. Just like anything in life, have to kiss a lot of frogs before I find my princess. Good deals rarely make it to the market.

One thing I’ve learned is that there are more wear and tear on lower end properties. Everything in life has a price. There’s a reason why something is cheap and not selling.

I'm no expert but looking at the numbers provided on the Redfin site this does not look like "cash your IRA and quit your W2" kinda deal. With estimated monthly payment of $10,424 and annual gross income of $130,056 what's left at the end of the day - $5K per year? How many of $300Ks your average under-40 tech worker can cash out of their IRA? Maybe 2. Maybe. So $10K per year and dealing with tenants, toilets and all that jazz...

Not my cup of tea so I won’t spend time on it.

OTOH, a quick glance on this 6-unit property in Santa Rosa looks very interesting. A 3/1 SFH, a 1-bed cottage and a 4-plex for $1.8M. 🤔

But then again, not my market and not in a vacation rental area I’m looking for.

It’s our job to figure out and polish the diamond in the rough. No one is going to sell us a prime piece of asset at a big discounted price.

Bitcoiner says

EMAN, question for you. I am a small time investor. SFH’s only. If you were in my shoes would you recommend looking into multi family investments or should I stick with SFH’s. SFH’s seem relatively easy to manage/handle with my PM. They are all in AZ. I live in North county SD. Multi family seems like a much bigger time effort and headache. In general, I suppose apartments mean lower quality of renters (more issues/complaints/dumb mistakes by renters etc). For my SFH’s I was lucky so far. Great renters, barely complain, pay on time, clean etc.
I guess my question is, from your experience is it worth the time/nerves to get into multi family? I thought of getting into multi family with a partner. But not easy to find the right one and that could cause other issues down the road. I am far from going full time into RE and quitting my W2 job. So I prob can’t handle another FT side job by managing rentals. Any advice would be much appreciated.

1) you must have a property manager for all your rentals. You want to be an investor, not a landlord.

2) it depends on your goal. If you want to keep your W2, slowly accumulating SFH is a good approach.

3) Owning and running multifamily is a business. Treat it like one. I help my friends with repairs, whenever I can, as they’re still holding down their W2, and these buildings are in my farm.

4) my partner and I don’t have a job so real estate investing is our full-time gig. Multifamily buildings are our babies. On average, we get $250-$400k/year distribution each. It took us 6-7 years to get to this point. It’s definitely better than working a W2 for me. My partner also gets $180-$200k/year in dividends from his stock portfolio alone so he’s not hurting for money.

5) If you could come up with a plan and could execute it, it wouldn’t be a bad idea to quit your W2 and give it a shot. Have your wife bring home the bacon while you’re building the family empire. This was my approach, and fortunately it worked out.

6) not bragging, but my friends were complaining about getting raises below the rate of inflation. This is the beauty of real estate. Low tax rates. I didn’t come up with the IRS tax codes. Don’t hate the players. Hate the game.

B.A.C.A.H. says

Now that I'm retired and living off those types of accounts, it made me feel stupid. Because nearly all the growth of those was long term capital gains, and dividends, which on the federal return are taxed at a lower rate than ordinary income. But the retirement account withdrawals are taxed as ordinary income.

That's not quite right. When you earn W2 money you have two ways to go:
(1) Pay income tax, then invest where you pay capital gains over and over again for each capital gain.
(2) Pay no income tax up front, invest with no taxes on capital gains, and then — finally — pay income tax at the end.

Situation (2) looks like a lower tax deal generally. Add to it that you can flee California and have lower income tax in retirement.

The problem with (2) is that you are a bit limited in use of the money until you hit retirement age.

The other problem with (2) is if you work your whole life in a no-tax state and then decide to move to California or New York for retirement. But if that is you, you have bigger problems then just taxes!

Eman says

1) you must have a property manager for all your rentals. You want to be an investor, not a landlord.

2) it depends on your goal. If you want to keep your W2, slowly accumulating SFH is a good approach.

3) Owning and running multifamily is a business. Treat it like one. I help my friends with repairs, whenever I can, as they’re still holding down their W2, and these buildings are in my farm.

3) my partner and I don’t have a job so real estate investing (some text omitted to shorten quote...) and give it a shot. Have your wife bring home the bacon while you’re building the family empire. This was my approach, and fortunately it worked out.

6) not bragging, but my friends were complaining about getting raises below the rate of inflation. This is the beauty of real estate. Low tax rates. I didn’t come up with the IRS tax codes. Don’t hate the players. Hate the game.

What's "distributions" in this context? Equity loans?

RWSGFY says

What's "distributions" in this context? Equity loans?

Distributions = cash flow + flip profits + cash out refinance.

Cash flow and cash out refinance are generally tax-free/deferred. Flip profits can be tax-free if I have enough phantom losses to offset. Taxes will be paid on what I can’t offset.

I had big phantom losses in 2019 so even my wife’s six figure salary and flip profits were completely being offset. Our AGI was just over $26k so we were in the 0% tax bracket. We got a full refund on the Fed and State tax withholdings on my wife’s salary. I love my CPA.

Formula is quite simple on the cash out refinance. 3% annual rent increase on $2M gross rent = $60k. Say 30% goes to pay for increase in expenses. Net $42k/year. That’s $21k/year increase in cash flow per guy. Which job offers $21k/year in salary increase year in and year out?

$42k/year = $3.5k/month. $3.5k/month can service $700k+ in mortgage payments when rates were 3.25-3.75%. Principal pay down is $250k/year on the mortgages. Rather than taking $42k/year in cash flow distribution increase, we do cash out refinance on a couple buildings each year. That’s $950k in equity that can be tapped each year. Our target is $500-$700k/year in cash out proceeds and use that money to buy another building. Rinse and repeat.

Each year, we set aside $150k for capital improvements/remodeling. This will allow us to increase rent significantly whenever we have a turnover. $500/month rent increase = $100k in equity. $1k/month = $200k. 3-4 turnovers can equate to $300-$600k increase in equity, not including the regular 3% annual rent increase on all other units. This is why we love buying underperforming assets. Don’t mind “overpaying” for them, polishing them up and reaping the rewards. We’re patient and let time do the heavy lifting.

Even with no natural turnovers, $50 annual rent increase per unit on a 10 unit building = $100k increase in equity. 5-7 years and we’re looking at $500-$700k, not including principal pay down. I love talking real estate.

@Bitcoiner,

Because of what I shared above, I love owning multifamily. There’s more scale, more cash flow and the appreciation is just as good as SFH. At the same time, I want to own a few good SFH so I can pass them down to the kids while they get to keep the low property tax basis. Only you can decide which path is suitable with your risk tolerance and personality.

This is the kind of stuff that I plan. I don’t plan for retirement and 529 plan or private schools for the kids. I know I’ll work until the day I die. For the last couple years, I mostly sit on my rear end waiting for better opportunities to pounce. I finally understand why Charlie Munger said sitting on our ass doing nothing is hard.

Eman says

cash out refinance are generally tax-free/deferred

Cash out refinance is not taxed because it is a loan, not income. Yes you can spend it, but it is no more an "earnings" than is taking out a credit card advance and calling it "back pocket refinance." Both have to be paid back. Cash out also has points, origination fees and possible other loan costs, although you can deduct the interest from the cash out.

HeadSet says

Eman says

cash out refinance are generally tax-free/deferred

Cash out refinance is not taxed because it is a loan, not income. Yes you can spend it, but it is no more an "earnings" than is taking out a credit card advance and calling it "back pocket refinance." Both have to be paid back. Cash out also has points, origination fees and possible other loan costs, although you can deduct the interest from the cash out.

My experience has been somewhat different in the last decade. No points for cash-out refinance and no origination fees. Points have to be paid if the refinance, or the sale, happened within the prepayment penalty period. The prepayment penalty period can be anywhere between 2-5 years. It’s negotiable.

75% LTV IO bridge loans were standard for us during the stabilization period. Once the building is semi- or stabilized, we would do a cash out refi to get our equity back. Then let the building do its thing for another 3+ years before we would consider another cash out refi. Escrow fees are always a few thousand dollars.

There’s a saying in CRE. Refi until you drop dead. The kids will get a stepped up in basis. No depreciation needs to be recaptured. No taxes to be paid on the cash-out proceeds. An alternative is to sell and exchange into a NNN for cash flow for some older folks.

I’ve seen some people sold their apartment, exchanged into a couple prime SFHs, rent them out to their adult kids or grandkids. Once they’re gone, the kids will get a stepped up in basis, inherit the houses while they keep the low property tax basis. These are the kind of things I’d never know if I wasn’t in the biz and witnessed them myself. Experience is truly the best teacher.

Eman says

we would do a cash out refi to get our equity back

You are not getting your equity back, you are simply getting a secured loan with an added stream of payments. That is, adding to your debt.


Eman says

No depreciation needs to be recaptured.

Depreciation has nothing to do with a property having a loan or not.

Eman says

The kids will get a stepped up in basis.

That makes no sense. The "stepped up basis" is where IRS resets the market value of these assets to their value on the date of the original owner’s death. You want this to be as high as possible to minimize the kids future cap gain taxes. Why would you want to lower the value of the asset by subtracting the loan balance from the home value, even if that were possible?

Eman says

inherit the houses while they keep the low property tax basis.

That must be a CA Prop 13 thing, as most places tax houses on the current assessed value, inherited or not.

HeadSet says

You are not getting your equity back, you are simply getting a secured loan with an added stream of payments. That is, adding to your debt.

Yes, but it is a tax free paycheck. As long as rent increases and value, it's an unlimited paycheck, again, tax free. At minimum you're making 5-30% tax free gains assuming appreciation is positive. That's like owning Amazon or Apple with $100k invested and getting $30k+ per year tax free. And you can sell the asset and pay no taxes. Filing jointly you can write off your wife's income with the depreciation if you time it right.

Retirement funds have their place as protected assets. Real estate is hands down the best asset to have beside running a successful business. Which generally real estate is involved in one way or another.

My advice is always asset protection. It's not sexy or get rich quick, but if you fuck up you'll have money still. From there it's real estate. 99.9% won't be billionaires, but someone like my uncle with $100M is not complaining at all. It's not difficult to get there if you're not a douche bag, can manage, have patience, etc. I lack the patience. Been my weak spot my entire life. And trust. I can't trust other with my investments.

WookieMan says

Yes, but it is a tax free paycheck

Why does everyone who takes a loan on equity act as if there are no payments on the loan? No tax either if you take out some "wallet equity" by getting a cash advance on your Mastercard.

HeadSet says

WookieMan says

Yes, but it is a tax free paycheck

Why does everyone who takes a loan on equity act as if there are no payments on the loan? No tax either if you take out some "wallet equity" by getting a cash advance on your Mastercard.

Tenants pay it. You can borrow on margin with stocks and pay yourself or invest more. Everything comes with a risk. Real estate is just easier because people need a roof over their head. No one "needs" stocks. Investment property you can only cash out out so much LTV. It's forced protection from a crash. Again, no different than margin with stocks that are automatically sold if you made a bad bet.

Real estate as much as I hate it is the safest path to wealth if you're patient and don't get greedy. I can make $300k in real estate holdings and pay no taxes. I could make $300k at Toyota and pay $50k in W2 taxes. It's nothing like getting a cash advance on a credit card. Between 1031 and inheritance you technically don't have to pay taxes on income ever. You can print yourself a check and never owe uncle same a dime. Again, it just takes patience. It doesn't happen overnight.

WookieMan says

Tenants pay it.

No, they don't pay it. Tenants pay the same rent whether you took out an equity loan or not. In fact, the loan payments decrease the net revenue you get from the rental unit. That is, you are paying it.

This seems to be the "equity" logic:

A $100k unsecured loan at 5% for 10 years will cost about $1,061 per month. Obviously, a loan that needs to be paid back, costing over $27k interest.

Get the same loan but use your equity as collateral and suddenly it is "tax free money."

HeadSet says

That makes no sense. The "stepped up basis" is where IRS resets the market value of these assets to their value on the date of the original owner’s death. You want this to be as high as possible to minimize the kids future cap gain taxes. Why would you want to lower the value of the asset by subtracting the loan balance from the home value, even if that were possible?

HeadSet says

That must be a CA Prop 13 thing,

It's a Proposition 13 thing.

Kids get the stepped up basis for income tax purposes, and inherit the parents' assessed valuation for property tax purposes.

As California is becoming a Nation of Renters, it's only a matter of time before Proposition 13 is reformed. Or repealed.

HeadSet says

No, they don't pay it. Tenants pay the same rent whether you took out an equity loan or not. In fact, the loan payments decrease the net revenue you get from the rental unit. That is, you are paying it.

The tenant pays it. If you're lucky you find an 80/20 lender. Pay down the principle from rents and then appreciation on a new appraisal and the cash out with free money. This will take 2-5 years. That's why you need hundreds of units/homes long term to be fuck you wealthy.

You can still show a loss as well and carry that forward and cash out refi and not pay taxes. This is literally what Trump does and most big real estate investors do. I've worked with a dude with 2,000 units in Chicago. He ate shit during the housing bust but is back where he was and even better as recently as 5 years ago. I don't play the game, but know it.

You hear these "gurus" talking about cash flow. You don't need cash flows to pay yourself shitloads of federal and state free tax income. Outside of the housing crash, real estate investment has been consistent. Even if there was 0% appreciation, you're tenants paid down your principle. Pay some fees to cash out refi and pay yourself $20k. If there was appreciation then it could be $40k. Rinse and repeat.

I could cash out $140k out of my house tomorrow. I don't pay taxes on it. And I could still sell the house at a profit. That's what real estate investors do. It's tax free income. And they get to depreciate it. "Lose" money. You can't do any of this with a W2 job or pretty much any 1099/IC jobs. $100k/yr job is only $80k. Most RE investors $100k is $100k. And you have an asset that generally appreciates.

WookieMan says

cash out refi and not pay taxes.

Of course you do not pay taxes on a loan, but you do pay interest. The rest of your post is just an abstract on the benefits of Schedule E, which are the same whether you borrow against the equity or not. I still get depreciation on rental property whether it has a lien on it or not. True, you do get to expense the interest on the Schedule E which partially offsets the cost, but you can deduct interest from a HELOC on your residence as well. Do you consider a HELOC to be "tax free money?"

GNL says

What is anyone's opinion, here, on how Soros has achieved his financial position?

@GNL I think the bulk of it is from shorting the British Pound at the right time.

WookieMan says

I could cash out $140k out of my house tomorrow. I don't pay taxes on it. And I could still sell the house at a profit.

Yes, and you would now have monthly payment you did not have before. And if you pay off the loan when you sell the house, you net $140,000 less. Again, why do all these "cash out" people forget about the newly generated loan payments?

HeadSet says

WookieMan says

I could cash out $140k out of my house tomorrow. I don't pay taxes on it. And I could still sell the house at a profit.

Yes, and you would now have monthly payment you did not have before. And if you pay off the loan when you sell the house, you net $140,000 less. Again, why do all these "cash out" people forget about the newly generated loan payments?

I believe I see the misunderstanding. Wookieman is correct that the tenants pay it. Here’s an example from one of the buildings we bought 5 years ago. 12 units @ $1k/mo/unit rent.

After 5 years, we had 3 turnovers where we rehabbed and rented for $1,850 each. That’s $2,550 increase in rent. 9 units are now at $1,275/month. That’s $2,475 increase/month. Total = $5,025/month increase. Let’s round it up to $5k.

Assume 30% is allocated to the increase in expenses. This nets us $3.5k/month in additional cash flow or $42k/year.

Unlike residential, the bank is the gatekeeper in CRE. The maximum they will lend on the increase cash flow is 1.25 DSCR (debt service coverage ratio). This means max cash out not to exceed $2.8k/mo (of $3.5k/mo increase in cash flow) in additional mortgage payment.

$2.8k/month can service $520k of debt at 5% plus whatever principal the tenants have paid down in the last 5 years that we can also cash out. Our cash flow will increase an addition $700/month while we got $520k of cash out + principal pay down tax-free/deferred.

Rather than getting $33.6k/year of cash flow ($2.8k/mo x 12 mo), we take $520k cash out now (equivalent to about 15 years of cash flow) and redeploy it to another purchase, which hopefully will help us generate more cash flow and equity. I hope this makes sense.

Eman says

Rather than getting $33.6k/year of cash flow ($2.8k/mo x 12 mo), we take $520k cash out now (equivalent to about 15 years of cash flow) and redeploy it to another purchase, which hopefully will help us generate more cash flow and equity. I hope this makes sense.

That changes nothing. You borrowed against one property to buy another, that is not free money. It is no different than borrowing money to buy real estate in the first place. If you had mortgaged that new property for that $520k, would you have considered that $520k free money?

Patrick says

GNL says

What is anyone's opinion, here, on how Soros has achieved his financial position?

GNL I think the bulk of it is from shorting the British Pound at the right time.

How does he have a reputation of crashing economies?

HeadSet says

Eman says

Rather than getting $33.6k/year of cash flow ($2.8k/mo x 12 mo), we take $520k cash out now (equivalent to about 15 years of cash flow) and redeploy it to another purchase, which hopefully will help us generate more cash flow and equity. I hope this makes sense.

That changes nothing. You borrowed against one property to buy another, that is not free money. It is no different than borrowing money to buy real estate in the first place. If you had mortgaged that new property for that $520k, would you have considered that $520k free money?

I look at it as an option:

1) either get $33.6k/year in cash flow for the next 15.5 year, or
2) get $520k now rather than over 15.5 year. I get a choice on what to do with that money now. Can park it in money market account and make 4%….ish if there’s no better use for it.

Another way to look at it, for someone who makes $33.6k/year, they have a choice of collecting $33.6k/year over the next 15.5 years, or get $520k now and work for free for the next 15 years. They get to decide however they want to do with that $520k now.

We can agree to disagree if you don’t see it the same way.

To add to the above, have to pay taxes on cash flow while no taxes to pay on the $520k cash-out now, or ever if follow the IRS tax code.

Eman says

We can agree to disagree if you don’t see it the same way.

We do not disagree about borrowing to invest. That is how most businesses work, in and outside of real estate. What I disagree about is that a loan is free money just because it uses real estate as collateral.

HeadSet says

Eman says

We can agree to disagree if you don’t see it the same way.

We do not disagree about borrowing to invest. That is how most businesses work, in and outside of real estate. What I disagree about is that a loan is free money just because it uses real estate as collateral.

It is tax-free money to investor because the debt is being serviced by the tenants/the asset’s cash flow. The money can be tax-free…forever if the investor follows the tax code. This is why most real estate investors don’t pay much in taxes. The tax codes encourage this behavior.

HeadSet says

WookieMan says

cash out refi and not pay taxes.

Of course you do not pay taxes on a loan, but you do pay interest. The rest of your post is just an abstract on the benefits of Schedule E, which are the same whether you borrow against the equity or not. I still get depreciation on rental property whether it has a lien on it or not. True, you do get to expense the interest on the Schedule E which partially offsets the cost, but you can deduct interest from a HELOC on your residence as well. Do you consider a HELOC to be "tax free money?"

Isn't it capped at $10K now?

Eman says

It is free money to investor because the debt is being serviced by the tenants/the asset’s cash flow.

If you just cash out equity, then the asset's cash flow is reduced by the amount of the loan payment. That is, YOU are paying the LOAN whether you invest it elsewhere or use it to buy a new truck.

Eman says

The money can be tax-free

What do you mean CAN be tax free - all loans are tax free. You are mixing your variables here.

Eman says

HeadSet says

Eman says

We can agree to disagree if you don’t see it the same way.

We do not disagree about borrowing to invest. That is how most businesses work, in and outside of real estate. What I disagree about is that a loan is free money just because it uses real estate as collateral.

It is free money to investor because the debt is being serviced by the tenants/the asset’s cash flow. The money can be tax-free…forever if the investor follows the tax code. This is why most real estate investors don’t pay much in taxes. The tax codes encourage this behavior.

i got me one rental btw. was really inspired by your story. its sfh. so will leave it for kids after i hit the bucket. cashflow is nice, although today bank interest pays similar or better rate. might get 2 more, all the cash i got left now just collecting about 4.8% should be enough for the 2 rentals.

RWSGFY says

Isn't it capped at $10K now?

You may be referring to the $10k limit on Federal deduction of State and Local taxes.

FortwayeAsFuckJoeBiden says

i got me one rental btw. was really inspired by your story. its sfh. so will leave it for kids after i hit the bucket. cashflow is nice, although today bank interest pays similar or better rate. might get 2 more, all the cash i got left now just collecting about 4.8% should be enough for the 2 rentals.

Congrats FortWayne. As Sam Zell learned it first hand during the early 1990’s S&L crisis, liquidity = value. If you can’t find good deals, keep the cash and collect your 4.8% interest. No need to force anything.

With respect to rentals, it depends on your goal. You can do it as a hobby and pick up one here and there. If you want to make it into a biz, you must think of scalability. Can’t scale too far with just your money/savings so the ability to reuse your seed capital is a must.

Stuff tends to break on a Friday afternoon, the weekends, or a long holiday weekend. Money will solve these inconveniences. If you have scale, your handyman will handle them. If your handyman wants to enjoy his weekends, your property manager will assign the work out to his contractors although my handyman loves to do these tasks on the weekends for a different reason. 😅 Don’t get burnt out being a landlord if you decide to scale it up.

At this point, I’m going to focus on adding more prime assets and keeping them for the next generation. I wish I had the capital to do it during the GFC. All nieces and nephew will have access to them as I believe housing will become even more expensive in the future. Can’t take anything with us when we kick the bucket. If we can take care of our loved ones in any way, it’s a great feeling.

Happy Memorial weekend.

HeadSet says

Eman says

It is free money to investor because the debt is being serviced by the tenants/the asset’s cash flow.

If you just cash out equity, then the asset's cash flow is reduced by the amount of the loan payment. That is, YOU are paying the LOAN whether you invest it elsewhere or use it to buy a new truck.

Eman says

The money can be tax-free

What do you mean CAN be tax free - all loans are tax free. You are mixing your variables here.

😁 👍

HeadSet says

RWSGFY says

Isn't it capped at $10K now?

You may be referring to the $10k limit on Federal deduction of State and Local taxes.

Nope, it's everything rolled together: state taxes and mortgage interest. And to deduct HELOC interest you must be ready to prove the money were used for property improvement.

RWSGFY says

Nope, it's everything rolled together: state taxes and mortgage interest

Are you sure about that?

RWSGFY says

And to deduct HELOC interest you must be ready to prove the money were used for property improvement.

This is true.