4 ms·

They borrow money using their assets as collateral

• SilasX 5y ago
  ... and then have to pay interest on top of the taxes for whatever they realize to pay it back (and the eventual “legit” realization)?
  • GeneralTspoon 5y ago
    Potentially. But there’s also an inheritance loophole that allows them to avoid that: https://www.thebalance.com/how-the-stepped-up-basis-loophole-works-357485 https://www.thebalance.com/how-the-stepped-up-basis-loophole... Even without that loophole there are probably a bunch of tricks their financial planners have to minimise taxes (e.g. using trusts/charities, various tax free allowances). Or alternatively, because they essentially get to defer taxes for as long as they like (by refinancing the loan), it means they have the full tax free amount of cash available up front to buy more wealth generating assets.
    • gruez 5y ago
      > Potentially. But there’s also an inheritance loophole that allows them to avoid that: https://www.thebalance.com/how-the-stepped-up-basis-loophole https://www.thebalance.com/how-the-stepped-up-basis-loophole... but you still pay the estate tax? Otherwise you get hit by the capital gains tax AND the estate tax.