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The wealthy borrow against their assets at stupid low interest rates, and those loans are not subject to income tax. Got a billion dollars in stock? Borrow as
by devoutsalsa 5y ago
The wealthy borrow against their assets at stupid low interest rates, and those loans are not subject to income tax. Got a billion dollars in stock? Borrow as much as you need to pay for that yacht.
- deleted 5y ago[deleted]
- missedthecue 5y agoeventually you have to sell the stock to pay off the loan(s), triggering a tax event. If you wait until death, you get walloped by the estate tax, which is even higher than income tax.
- devoutsalsa 5y agoWait until you hear about inherited stock... https://www.investopedia.com/terms/i/inherited-stock.asp https://www.investopedia.com/terms/i/inherited-stock.asp Say the stock you borrow against was purchased at $10, and is now worth $100. That's a $90 increase. You get hit by a bus and die. The stocks cost for tax purposes is increased to $100 for the heirs, meaning that $90 increase is not taxed as a gain (not sure about how it's tax as inheritance).
- missedthecue 5y agoThe cost basis resets, so say it goes from $100 to $110, the inheritor will only pay taxes on $10 of gains. But that doesn't prevent inheritance tax, which on a billion dollar fortune will exceed 50%. Even more if you die in places like NY or CA.