Is a cash-out refinance in Washington taxable?

The cash you receive from a cash-out refinance is not considered taxable income — you're borrowing against equity you already own, not earning income. However, how you use the funds may have tax implications. Interest paid on the new, higher loan balance may be deductible if the funds are used for home improvements and you itemize deductions. For non-home-improvement uses, interest deductibility is limited. Talk to a CPA about your specific situation — a lender gives you the loan, not the tax strategy.