Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.2 9/5/84; site ism780c.UUCP
Path: utzoo!decvax!ucbvax!hplabs!sdcrdcf!ism780c!geoff
From: geoff@ism780c.UUCP (Geoff Kimbrough)
Newsgroups: net.taxes,net.legal
Subject: Re: Money from refinancing
Message-ID: <3680@ism780c.UUCP>
Date: Fri, 26-Sep-86 13:54:39 EDT
Article-I.D.: ism780c.3680
Posted: Fri Sep 26 13:54:39 1986
Date-Received: Sun, 28-Sep-86 20:27:53 EDT
References: <8@oliveb.UUCP> <3788@nsc.UUCP>
Reply-To: geoff@ism780c.UUCP (Geoff Kimbrough)
Distribution: na
Organization: Interactive Systems Corp., Santa Monica, CA
Lines: 46
Keywords: IRS (I Retroactivly Steal)
Xref: ucbvax net.taxes:80 net.legal:769

Summary:

In article <3788@nsc.UUCP> ken@nsc.UUCP (Ken Trant) writes:
>In article <8@oliveb.UUCP> gnome@oliveb.UUCP (Gary) writes:
>>What are the ramifications of "taking money out" when
>>refinancing your house?
>>It looks like a good way to finance major home improvements
>>but I am somewhat leary about the long-term effects.
>
>           IRS: Loss of Tax Deductions for refinancing
>
>  The points that lenders charge when you trade in a high-priced mortgage
>are one of the major costs of refinancing. Each point is 1% of the mortgage
>amount. The IRS is now telling taxpayers that points may not be deducted 
>in the year they are paid. That position can easily cost you $1000.00 or
>more in higher taxes if you refinance this year.
> [...]
>                    Home Improvements:
>   That's just the beginning of the complications. If you refinance for 
>more than the balance of your mortgage and use the extra cash for home 
>improvements, you have to split the points for tax purposes. If 15% of
>the new mortgage goes for improvements, for example, 15% of the points can
>be deducted in the year of the refinancing, with the other 85% deducted in
>little chunks over the life of the loan.
> [...]
>Ken Trant
>Real Estate Professionals
>415-651-3131
	Thank you, Ken for this informative article.  I have one more
question.  What can you do with the points paid if you refinance to
withdraw funds to settle a divorce?  (As in buying your ex's half of the
equity?)  Is there any difference or advantage to refinancing the whole
mortgage vs. taking out a 2nd? (aside from the obvious interest rate
difference)  What, then, if you sell soon afterwards.  These are not
theoretical questions, I know someone who needs to know, and soon.
I'm not sure what you mean by "trading in a high-priced mortgage", in this
case, the old mortgage has a lower interest rate than is available now.
Will this make a difference in the points charged?
Also (this is why I cross-posted to net.legal) are there tax differences
between a straight sell-and-divide-profits and refinance and get a
quit-claim?  Both parties are in about the same tax bracket, by the way.

			       advTHANKSance
	  Geoffrey Kimbrough -- Director of Dangerous Activities
	 INTERACTIVE Systems Corporation,  Santa Monica California
     ihnp4!ima!geoff || sdcrdcf!ism780c!geoff || ucla-cs!ism780!geoff

I think, therefore I...         I umm...         er...           nevermind.