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The rich avoid taxes with a strategy “Buy, Borrow, Die”:
1) Buy assets & hold (to avoid capital gains tax)
2) Use assets as collateral to borrow money (while assets appreciate)
3) Interest paid on loans is a tax deduction
4) Die & pass on assets tax-free
Let's discuss this:
The “buy, borrow, die” strategy is an estate planning tool the wealthy use to minimize the taxes they owe.
The "Buy, Borrow, Die" strategy allows the wealthy to:
• borrow against their assets without selling them
• Let their those appreciate in value while funding their lifestyle
• While also minimizing their tax bill and then passing on their wealth with minimal tax
The "buy, borrow, die" strategy can be a very effective way for wealthy individuals to avoid paying taxes on their wealth. This strategy assumes that the loan will be paid back in full. Failing to pay the loan back would make the loan taxable.
There are some risks associated with this strategy;
The wealthy use tax law to their advantage and you can too.
(By @FluentInFinance)
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5 Comments
Bob Harper
Making your home a more joyful place to live through beautiful & functional cabinets.
3w
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When is the debt paid off? Are they making interest payments along the way? Do they have to liquidate assets to pay down the loan?
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Mark Allen
Global Channel Sales Director
1mo
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U dont nention inheritance tax owed by the heirs in many states. This is not the same as the stepped up basis heir use to avoid capital gains tax
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Mark Evers
Software Engineer & Coder Extraordinaire!
5mo
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What happens to the debt of the cash loans? I understand that the interest incurred on the loan is being paid, but what happens to money owed on the original loan amount? Does it just disappear when the wealthy person dies?
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Oliver Cobb
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5mo
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Will discuss further with my estate planner
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