3 ms·

>If your unrealized CG is so high that you can live off the loan until you die or retire, then it semantically isn't really a loan, is it. It is, because it ge

>If your unrealized CG is so high that you can live off the loan until you die or retire, then it semantically isn't really a loan, is it. It is, because it gets paid back. What a stupid fucking line to draw “loans” and “not loans” at. Do you consider people who take out mortgages that don’t pay them back before they die to not be taking out loans? Because that happens all the time. My father took out a 30 year mortgage when he was 84. F

hedora 3y ago
The ultra wealthy can borrow vs. holdings at close to prime, which was basically zero when that article was written. So, they could take out a multi-decade 0% “loan” secured by stocks held at the same bank, and then pay it back, interest free after decades of inflation, and after decades of appreciation on the underlying stock portfolio. Of course, at that point, they could pay the loan off by borrowing more against their portfolio. In this way, they can recursively never pay tax on the money they received (and spent) in exchange for “not selling” it to a financial institution that will no longer let them withdraw the collateral. If: (1) your father’s mortgage was used to pay off debt by using existing real estate holdings as collateral (2) where the holdings appreciated significantly over the lifetime of the previous loan, (3) the previous loan was collateralized by other real estate holdings, (4) he then re-mortgaged a small fraction of those holdings to generate free cash flow for personal use, and (5) this strategy only worked due to the bank giving him loans significantly below market value, due to other considerations regarding your father’s impact on the bank’s broader business, Then, no, I wouldn’t consider that set of financial transactions to be a loan.

3 ms·

>If your unrealized CG is so high that you can live off the loan until you die or retire, then it semantically isn't really a loan, is it. It is, because it ge

by kortilla 3y ago

hedora 3y ago
The ultra wealthy can borrow vs. holdings at close to prime, which was basically zero when that article was written. So, they could take out a multi-decade 0% “loan” secured by stocks held at the same bank, and then pay it back, interest free after decades of inflation, and after decades of appreciation on the underlying stock portfolio. Of course, at that point, they could pay the loan off by borrowing more against their portfolio. In this way, they can recursively never pay tax on the money they received (and spent) in exchange for “not selling” it to a financial institution that will no longer let them withdraw the collateral. If: (1) your father’s mortgage was used to pay off debt by using existing real estate holdings as collateral (2) where the holdings appreciated significantly over the lifetime of the previous loan, (3) the previous loan was collateralized by other real estate holdings, (4) he then re-mortgaged a small fraction of those holdings to generate free cash flow for personal use, and (5) this strategy only worked due to the bank giving him loans significantly below market value, due to other considerations regarding your father’s impact on the bank’s broader business, Then, no, I wouldn’t consider that set of financial transactions to be a loan.