No, the cash from a cash-out refinance isn’t considered taxable income because the IRS knows you have to pay it back. You see, when you unlock your home equity by doing a cash-out refinance, your mortgage balance goes up. So given that any cash you receive as a result of the cash-out refinance needs to be paid back to your lender, it isn’t considered taxable income.
Fund fact: Any interest you are charged on the new mortgage (after you’ve done the cash-out refinance) is considered tax-deductible.
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