cash out refi question
If I refinance a commercial property and take money out to pay off my primary residence- is this a taxable event? and is the mortgage interest on the new commercial loan tax deductible?
Property is owned as a sole proprietorship by us in California, primary residence is in California as well. No LLC involved.
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I am not a California accountant, but depends on how you account for it.
If you are claiming all the interest on the increased mortgage as a business expense for the commercial property, then the money you took out is a drawing, and will be taxable income for you.
If you're keeping the interest for the existing loan and the new loan separate, and only claiming the interest on the existing loan as a business expense, then, no, I don't expect that would be taxable.
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