 TITLE: Do I Have to Pay Taxes on a Cash-Out Refinance? CONTENT: Tax Implications of Cash-Out Refinancing\n----------------------------------------\nThe cash you collect from a cash-out refinancing isn't considered income. Therefore, you don't need to pay taxes on that cash. Instead of being considered income, a cash-out refinance is simply a loan.\nDepending on how you spend the money from a cash-out refinance, you might even be eligible for a tax deduction. For example, you're allowed to deduct the interest on the original loan if money from the cash-out refinance goes toward permanent improvements that boost the value of your home. Those improvements could be:\n1.  Putting in a swimming pool.\n2.  Adding a bedroom.\n3.  Installing a home security system.\n4.  Upgrading the heating and air conditioning system.\n5.  Replacing outdated windows.\nYou also can deduct all of the costs associated with buying points to lower the interest rate of the cash-out refinance.\nHowever, you cannot claim any tax deductions if you spend the money from the cash-out refinance on:\n*   Repairs, repainting and other work that doesn't increase the home's value.\n*   Consolidating debt, going on a cruise or anything else that's not tied to a home improvement project. END