1. Is this your main home or rental house?
2. What's your total loan amount and LTV? I mean this is conforming loan or high balance loan, Jumbo loan.
Base on this, CaLoanAgent can tell you it is good deal or not.
If it is investment property, the closing cost and the money for buying point is tax deductible. But you have to amortize the point(s) over life of the term or deduct the remaining balance when you do the next re-fi or sell the house (because term is finished, right?). If you do 30 year fix, spread in over30 years; if 15 year fix, spread it over 15 year. And you can only do this one time per loan broker. e.g.: if you do this from loan broker A, a few years late, do re-fi (from loan broker B) and buy the point again, deduct all the remaining balance at that year, then, start over point(s) amount spread from the same year.
File schedule E to for rental income (loss), the final number will show up / transfer into 1040 line #17. You can deduct some more other than this $4,000. Never forget to do depreciation!
Remember total loss allowed per year in schedule E is $10K if you are inactive participant or $25K if you are active participant
“For Tax purpose, can we get more benefit if we do the cashout refinance next year, when we get more rental income and the repair cost is low?” You can do cahsout re-fi now since it looks you haven’t hit $10K or $25K loss limit yet. The decision is when you can get best rate and other closing cost term.
