We closed on a home with a “renovation” loan where you borrow against the value of what the home WILL be. Example, the home is purchased for $50k but the value after renovations will be $100k. Our loan is for $70k so we walk away from closing with $20k. My question is how do we categorize the $20k of income? Would it be a capital expense refund or owner contribution or something else?
I’m curious how you ended up handling this question? I am new to Stessa and I have the same question.
This would just be a non-taxable overage of loan proceeds, right? You’d still owe that $70k, but $20k of it would still be in-hand? It doesn’t sound like there’s a profit situation occuring.