diff --git a/src/wallet/wallet.cpp b/src/wallet/wallet.cpp
index a054cb3fea..06b2808494 100644
--- a/src/wallet/wallet.cpp
+++ b/src/wallet/wallet.cpp
@@ -2370,12 +2370,12 @@ bool CWallet::SelectCoins(const std::vector<COutput>& vAvailableCoins, const CAm
     std::vector<COutput> vCoins(vAvailableCoins);
     CAmountMap value_to_select = mapTargetValue;
 
+    // Default to bnb was not used. If we use it, we set it later
+    bnb_used = false;
+
     // coin control -> return all selected outputs (we want all selected to go into the transaction for sure)
     if (coin_control.HasSelected() && !coin_control.fAllowOtherInputs)
     {
-        // We didn't use BnB here, so set it to false.
-        bnb_used = false;
-
         for (const COutput& out : vCoins)
         {
             if (!out.fSpendable)
@@ -2405,7 +2405,6 @@ bool CWallet::SelectCoins(const std::vector<COutput>& vAvailableCoins, const CAm
             const CWalletTx& wtx = it->second;
             // Clearly invalid input, fail
             if (wtx.tx->vout.size() <= outpoint.n) {
-                bnb_used = false;
                 return false;
             }
             // Just to calculate the marginal byte size
@@ -2416,7 +2415,6 @@ bool CWallet::SelectCoins(const std::vector<COutput>& vAvailableCoins, const CAm
             CInputCoin coin(&wtx, outpoint.n, wtx.GetSpendSize(outpoint.n, false));
             mapValueFromPresetInputs[wtx.GetOutputAsset(outpoint.n)] += amt;
             if (coin.m_input_bytes <= 0) {
-                bnb_used = false;
                 return false; // Not solvable, can't estimate size for fee
             }
             coin.effective_value = coin.value - coin_selection_params.effective_fee.GetFee(coin.m_input_bytes);
@@ -2427,7 +2425,6 @@ bool CWallet::SelectCoins(const std::vector<COutput>& vAvailableCoins, const CAm
             }
             setPresetCoins.insert(coin);
         } else {
-            bnb_used = false;
             return false; // TODO: Allow non-wallet inputs
         }
     }
@@ -3030,7 +3027,7 @@ bool CWallet::CreateTransaction(interfaces::Chain::Lock& locked_chain, const std
                 }
 
                 // Choose coins to use
-                bool bnb_used;
+                bool bnb_used = false;
                 if (pick_new_inputs) {
                     mapValueIn.clear();
                     setCoins.clear();
diff --git a/test/functional/rpc_fundrawtransaction.py b/test/functional/rpc_fundrawtransaction.py
index 82b59e1b7f..46b6183dec 100755
--- a/test/functional/rpc_fundrawtransaction.py
+++ b/test/functional/rpc_fundrawtransaction.py
@@ -93,6 +93,7 @@ class RawTransactionsTest(BitcoinTestFramework):
         self.test_option_feerate()
         self.test_address_reuse()
         self.test_option_subtract_fee_from_outputs()
+        self.test_subtract_fee_with_presets()
 
     def test_change_position(self):
         """Ensure setting changePosition in fundraw with an exact match is handled properly."""
@@ -767,5 +768,18 @@ class RawTransactionsTest(BitcoinTestFramework):
         # The total subtracted from the outputs is equal to the fee.
         assert_equal(share[0] + share[2] + share[3], result[0]['fee'])
 
+    def test_subtract_fee_with_presets(self):
+        self.log.info("Test fundrawtxn subtract fee from outputs with preset inputs that are sufficient")
+
+        addr = self.nodes[0].getnewaddress()
+        txid = self.nodes[0].sendtoaddress(addr, 10)
+        vout = find_vout_for_address(self.nodes[0], txid, addr)
+
+        rawtx = self.nodes[0].createrawtransaction([{'txid': txid, 'vout': vout}], [{self.nodes[0].getnewaddress(): 5}])
+        fundedtx = self.nodes[0].fundrawtransaction(rawtx, {'subtractFeeFromOutputs': [0]})
+        blindedtx = self.nodes[0].blindrawtransaction(fundedtx['hex'])
+        signedtx = self.nodes[0].signrawtransactionwithwallet(blindedtx)
+        self.nodes[0].sendrawtransaction(signedtx['hex'])
+
 if __name__ == '__main__':
     RawTransactionsTest().main()