What are the tax implications of the BRRRR method?

The cash you receive at the refinance is borrowed money, not income, so it is not taxed. Renovation costs are generally added to the property's basis and depreciated rather than deducted at once. Interest and operating costs on the rental are deductible. Confirm the details with a tax professional.

Rehab costs are usually capital improvements, recovered through depreciation over 27.5 years for residential rental property. Costs during the renovation, before the property is placed in service, are often capitalized as well. Once rented, interest, taxes, insurance and repairs become ordinary deductible expenses.

Depreciation shelters part of the rental income and is recaptured at sale. Rental losses are passive and may be limited by your income. A later sale can be deferred through a 1031 exchange. None of this is unique to BRRRR; the refinance is the only strategy-specific step, and borrowed money is not income.