Cash In Refi tax question

[Elewynne]

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Odd question: We have a former home that has been a rental for the past couple years. Last year we refinanced that rental property to both lower the interest rate and get rid of the PMI. The new mortgage appraisal came in just shy of the 20% needed to get rid of the PMI, so we put a couple thousand down to meet the required amount to drop the PMI, knowing we'd earn back that investment in a year or so given the savings.

BUT now we're stumped about how we should file taxes and TurboTax doesn't have this situation in its program it seems. All the tax advice is about cash OUT mortgages for rental properties. Any ideas on how to handle a cash IN rental refi?

 

[dpmd]

Odd question: We have a former home that has been a rental for the past couple years. Last year we refinanced that rental property to both lower the interest rate and get rid of the PMI. The new mortgage appraisal came in just shy of the 20% needed to get rid of the PMI, so we put a couple thousand down to meet the required amount to drop the PMI, knowing we'd earn back that investment in a year or so given the savings.

BUT now we're stumped about how we should file taxes and TurboTax doesn't have this situation in its program it seems. All the tax advice is about cash OUT mortgages for rental properties. Any ideas on how to handle a cash IN rental refi?

I don't think it is treated much differently than making extra principal payments during the life of the mortgage (which I could not find any way to take tax advantage of though the interest advantage was why I ended up doing it)