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Refinance Proceeds Waterfall Calculator
Cash-out refi proceeds flow through the waterfall just like sale proceeds — but they're debt, not taxable income. This calculator takes the new loan amount, subtracts old payoff and closing costs, and distributes the net cash through return-of-capital + promote splits to LP and GP.
Net refi proceeds
$2,880,000
LP share
$2,604,000
GP share
$276,000
LP capital returned
$2,500,000
GP promote amount
$26,000
How the math works
Refinance proceeds waterfall: net cash = new loan − old payoff − closing costs. Distributed first as return of capital pro-rata, then any excess flows through the promote waterfall. Tax-free cash-out via refinance is one of the most tax-efficient ways to return capital.
Refi proceeds are debt proceeds — not taxable to LPs. A 1031 exchange or refinance-and-hold beats a taxable sale for investors focused on tax deferral.
EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.
Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.
Learn more about our review process on the EveryCalc methodology page.
How this calculator works
What this page estimates
This Refinance Proceeds Waterfall Calculator is built to give a quick, browser-based estimate for refinance proceeds waterfall. Cash-out refi proceeds flow through the waterfall just like sale proceeds — but they're debt, not taxable income. This calculator takes the new loan amount, subtracts old payoff and closing costs, and distributes the net cash through return-of-capital + promote splits to LP and GP. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.
Calculation approach
The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.
Example workflow
For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.
Practical checks
- Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
- Run a low, base, and high case when the inputs are estimates.
- Check the related calculators below when the next decision depends on a different assumption.
How to interpret the refinance proceeds waterfall result
Best use
Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.
Cross-check
Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.
Watch for
Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.
This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.
Before relying on this refinance proceeds waterfall estimate
Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.
Confirm source numbers
Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.
Separate cash flow from total cost
A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.
Run conservative cases
Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.
Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.
How to Use
- Enter new loan amount, old loan balance, and closing costs.
- Enter LP and GP capital still outstanding.
- Enter GP promote percentage.
- Read net proceeds and LP/GP distribution.
Frequently Asked Questions
Taxable?
Generally no — refinance proceeds are debt, not income. LPs receive tax-free distributions. This makes refi-and-hold vastly more tax-efficient than an outright sale for many investors.
How much can I cash out?
Limited by lender LTV/DSCR/debt yield. Typical refi: 65-75% LTV, 1.25x DSCR min. If NOI has grown, the new loan can be 20-40% higher than original — the incremental cash is distributable.
What about supplementary loans?
Agency multifamily allows supplementals — second mortgage from the same lender. Pre-pay penalty on original loan is avoided. Supplemental proceeds flow through the same waterfall.
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