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>the wealthy take loans secured by unrealized gains in order to finance their lifestyle Eventually they have to sell stock to pay back the loan? Aren't they j
by aantix 5y ago
>the wealthy take loans secured by unrealized gains in order to finance their lifestyle
Eventually they have to sell stock to pay back the loan?
Aren't they just delaying the taxation?
- bklyn11201 5y agoExactly, they are just delaying taxation. If their investments return less than loan interest, they will need to begin selling assets to pay the loans. If their equity compounds at a rate higher than the interest rate, then they can continue to defer until death where they can pass on to heirs and take advantage of basis step-up. https://www.thebalance.com/how-the-stepped-up-basis-loophole-works-357485 https://www.thebalance.com/how-the-stepped-up-basis-loophole...
- HWR_14 5y agoIf they delay taxation until death, the asset's basis resets and the only tax owed would be estate tax.