How the rich live tax free. Buy. Borrow. Die. #shorts

[logicalpakistani]

Instructions unclear, now I'm in hell with $18m in debt

[wck]

Not really explained, but that “stepped up basis” at the end means that when you inherit assets the gains on them are reset to zero. No capital gains at all.

[KeaganLegit]

So buy up appreciating stocks like apple, Coca Cola, S&P 500, Nasdaq. The stock needs to grow past the interest cost every year. Once I have a nice chunk of cash in there I can borrow against the stock and use it to live tax free and keep investing into the stock market, real estate or asserts that make me money. I keep this all going until I die and my heirs will take advantage of step up basis.

[jacksonalloyce]

How do they pay back the loan? If they are spending it on living expenses

[MiddleAgeAsian]

Your portfolio needs to meet certain thresholds and requirements before you can borrow against it. A bank isn’t going to loan any guy off the street money using their Robinhood account as collateral. Good tip, but missing a critical detail for the average fella.

[postapocalypticnewsradio]

Sounds to me like this system needs a revision.

[fosterlanham]

This is a good strategy until the interest rates are 4 times higher than your investments

[ronnbot]

"Buy appreciating market...usually the stock market"...um no, usually real estate by using home equity loan from one property to get another. Rental income from existing property is then used to reduce the debt-to-income ratio to help get/pay the mortgage on the new property. After some time and enough properties, investor can live off rental income alone. Can't do this with stocks.

[jonathanramsey]

Thank you! I had long known that wealthy people use loans to avoid taxes, but I always assumed they had to do something tricky like have a huge loss the year that they pay back the loans with asset sales. This makes more sense, although I’m not sure my former explanation isn’t another tool in their pockets, when it suits them

[covidiotseverywhere]

I love how the guy is getting more and more radical with every short. It's like rich people get to eat their cake, have it too, and then sell it off to unsuspecting people

[yoismelperez]

I am trying to figure this out, if I borrow I don't pay taxes but I pay interest on the loan. What am I missing? What assets will generate the icome to cover for that interest?

[easymunch]

If you want to apply this strategy to real estate, you can take advantage of depreciate to offset your cashflow, and when you’re ready for another property or have depreciated all the way you can take advantage of a 1031 exchange to roll your capital gains into a new property. As long as you keep reinvesting and acquiring more expensive proprieties, you can avoid paying tax as you continue to grow your real estate empire. When you eventually pass this all to your heirs, they inherit at a stepped up basis, negating all gains and the depreciation you’ve been using to offset cash flow.

[joshc]

Poor person here. How do they make monthly loan payments without selling their shares?

[fabio.]

How much is the complete course for people that aren't billionaires yet? 😄

[yamibakura]

Hint: Certain permanent life insurance policies if applied correctly.

[LittleRadicalThinker]

It’s true if the assets keep appreciating and the tax loophole never get fixed. You just don’t know the future, especially right now.

[numizumi]

I'm so poor i really still have no context on how to do this unless i was born with capital

[shericebsperspective]

The real estate example is more understandable.

[m.d.h.]

What would be the downside in requiring taxes be paid at acquisition of the assets?

[neko]

The main reason billionaires prefer borrowing over selling isn't saving taxes for their kids, most of them pledge most of their wealth to charity anyway

When you own a giant company you don't want to sell stock because
1. It looks like you lost faith in the company and investors would run away
2. If you sell too much you lose control of the company