Super Wealthy: Never Sell = No Capital Gains Strategy?

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techcrium
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Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by techcrium »

What do you think about the the never-sell-and-thus-incur-zero-capital-gains strategy?

Apparently it is what the ultra wealthy are doing.

In theory it could work: Say you have $2,000,000 with a withdrawal rate of 3% or $60,000.

Instead of selling your stocks, you just take it out as a loan on margin. Stocks are expected to grow 7%-12%, and eventually your 3% WR will turn into 2%, or even 1%. Eventually, when you die, all your investments are "stepped up" and then you let your debts settle and pass it on to your kids and the cycle continues.
Right now was a especially a great climate since interest rates were so low and growth exploded over the last 10 years. However, this may not be the case in the future.

Thoughts?


Reference: https://www.youtube.com/watch?v=F_yJ3PKmO8k&t=329s
Last edited by techcrium on Wed Jun 09, 2021 3:24 pm, edited 1 time in total.
Lee_WSP
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Re: Never Sell = No Capital Gains Strategy?

Post by Lee_WSP »

This would only work well if you had much more wealth than you'd ever actually need or be able to spend.
nalor511
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Re: Never Sell = No Capital Gains Strategy?

Post by nalor511 »

Plus, laws change, returns change, interest rates change -- you make your bets and take your chances.
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techcrium
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Re: Never Sell = No Capital Gains Strategy?

Post by techcrium »

Lee_WSP wrote: Wed Jun 09, 2021 2:52 pm This would only work well if you had much more wealth than you'd ever actually need or be able to spend.
Apparently back in 2006, Larry Ellison had a $2 billion line of credit when he was only worth $20 billion.

That is a 10% debt ratio...
psteinx
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Re: Never Sell = No Capital Gains Strategy?

Post by psteinx »

Even if you assume that portfolio growth is higher than interest rate (and, fwiw, my estimate on EXPECTED nominal returns on an all equity portfolio is closer to 6% than your 7-12%), the loan size grows each year. 3% the first year becomes ~6% the second, ~9% the third, etc. Even if the denominator (the portfolio size) grows, the leverage ratio increases. (-1+1.03^n)/(1.06^n)

For small values of n (and assuming, again, you actually get that 6% growth, rather than a market crash), the leverage isn't too bad. But as n goes to 10/20/30 years, the leverage ratio gets higher, and a single bear market could be catastrophic...
Marseille07
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Re: Never Sell = No Capital Gains Strategy?

Post by Marseille07 »

Don't you pay for the margin loan? Obviously this works if stocks grow 7~12%, but if stocks lose 38% like 2008 then you'd be stranded even more than simply selling stocks.
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Re: Never Sell = No Capital Gains Strategy?

Post by Thesaints »

Margin rates are around 7%...
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techcrium
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Re: Never Sell = No Capital Gains Strategy?

Post by techcrium »

Thesaints wrote: Wed Jun 09, 2021 3:04 pm Margin rates are around 7%...
https://www.td.com/ca/products-services ... /rates.jsp

I use TD and margin rates for $100K+ USD are 3.75%

I would presume if you have $20 million or more, you could probably get rates of 2% or less.
NiceUnparticularMan
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Re: Never Sell = No Capital Gains Strategy?

Post by NiceUnparticularMan »

I'm not a tax attorney, but as I recall there are some tax fraud cases which were at least broadly similar. Meaning personal investors were making stock loans to some company, the company took title of the stock to satisfy the loans, and the personal investors tried to avoid paying tax on the loan proceeds, and the taxing authorities took the positions these loans were actually disguised sales, and taxed them as sales on the date they were signed, not the date the stock was forfeited.

Now this might be different in ways that matter, and again I am not a tax attorney. But I'd certainly consult a good one before doing this.
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Re: Never Sell = No Capital Gains Strategy?

Post by Lee_WSP »

techcrium wrote: Wed Jun 09, 2021 2:56 pm
Lee_WSP wrote: Wed Jun 09, 2021 2:52 pm This would only work well if you had much more wealth than you'd ever actually need or be able to spend.
Apparently back in 2006, Larry Ellison had a $2 billion line of credit when he was only worth $20 billion.

That is a 10% debt ratio...
A line of credit is not a margin loan. A line of credit is the same as having a credit card with a 2 billion limit.
techcrium wrote: Wed Jun 09, 2021 3:11 pm
Thesaints wrote: Wed Jun 09, 2021 3:04 pm Margin rates are around 7%...
https://www.td.com/ca/products-services ... /rates.jsp

I use TD and margin rates for $100K+ USD are 3.75%

I would presume if you have $20 million or more, you could probably get rates of 2% or less.
And how do you propose paying down the loan? If you borrow $60k each year, it would take only ~20 years until you run out of maximum marginable balance (not even taking into account the possibility of price shocks). Ie, in ~20 or so years (very rough math) you will end up with a 50% debt to balance ratio (you'd probably face the margin call at 25% DTE though). It doesn't work unless you are able to keep your spending and subsequent borrowing to a small fraction of your wealth.
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David Jay
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by David Jay »

techcrium wrote: Wed Jun 09, 2021 2:46 pmSay you have $2,000,000 with a withdrawal rate of 3% or $60,000.
Well, if you are MFJ then you can take $80,000 in capital gains in the "zero percent" tax bracket, which is infinitely cheaper (sorry, bad math joke) than even a 2% margin loan.

Even if filing single, you can take $40,000 in the 0% bracket and $20,000 in the 15% tax bracket for a total tax "burden" of $3000.
Last edited by David Jay on Wed Jun 09, 2021 3:30 pm, edited 1 time in total.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by fyre4ce »

The basic strategy is sound under current tax law. But as has been pointed out, you're paying a guaranteed margin loan interest rate compared to only a speculative rate of return on the underlying investment, so there's no guarantee you'll come out ahead investment-wise. You also take on the risk of a margin call in a crash. And the numbers only work out if you have much more than you ever plan to live off of, and are trying to leverage the step-up in basis to your estate.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by livesoft »

One doesn't have to be Super Wealthy to get qualified dividend income and pay no income tax while letting the underlying shares have unrealized capital gains. Return of capital is also not taxed. Indeed, being Super Wealthy is a detriment to having your qualified dividends tax free. An earlier post showed how a MFJ couple could have about $4 million of VFINX (S&P 500 Index fund) and pay no income taxes.

I saw one person may not have had much in the way of income taxes, but they also donated about a billion dollars to charity. This forum has many posts on how to donate to charity (say your DAF) and take a tax deduction. Also many posts on how to die and get a stepped up basis.
Last edited by livesoft on Wed Jun 09, 2021 3:38 pm, edited 1 time in total.
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celia
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Re: Never Sell = No Capital Gains Strategy?

Post by celia »

OP, I’m not sure you’re talking about tax-deferred accounts or not, but these comments refer to tax-deferred:
techcrium wrote: Wed Jun 09, 2021 2:46 pm In theory it could work: Say you have $2,000,000 with a withdrawal rate of 3% or $60,000.
RMDs start with just under a 4% withdrawal rate and INCREASE each year until you die.
Instead of selling your stocks, you just take it out as a loan on margin. Stocks are expected to grow 7%-12%, and eventually your 3% WR will turn into 2%, or even 1%.
No, your withdrawal rate INCREASES as well as your balance until the percentage withdrawn each year is more than the rate of growth. The RMD MUST be withdrawn starting at 72, but doesn’t need to be sold. This is referred to as withdrawing in-kind.
Eventually, when you die, all your investments are "stepped up" ...
This only applies to taxable assets (not tax-deferred or Roth).
I don’t see any relevance of this video to this discussion, whether we’re talking about tax-deferred or not.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by 92irish »

Life insurance salesman have been promoting a similar concept with whole life insurance where the policy holder can borrow against the cash value. So, when you borrow against and get cash from your policy there is no tax, and when you die all the appreciation passes tax free to your heirs.

I am not a fan of life insurance, but I will say this is a pretty nice tax planning opportunity the insurance lobby has arranged for itself.
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Re: Never Sell = No Capital Gains Strategy?

Post by FreelancerNYC »

techcrium wrote: Wed Jun 09, 2021 3:11 pm
Thesaints wrote: Wed Jun 09, 2021 3:04 pm Margin rates are around 7%...
https://www.td.com/ca/products-services ... /rates.jsp

I use TD and margin rates for $100K+ USD are 3.75%

I would presume if you have $20 million or more, you could probably get rates of 2% or less.
You can easily get 1% right now with a $4-$5M portfolio. Just call and ask them to beat Interactive Brokers. #schwab
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Re: Never Sell = No Capital Gains Strategy?

Post by Soon2BXProgrammer »

Thesaints wrote: Wed Jun 09, 2021 3:04 pm Margin rates are around 7%...
techcrium wrote: Wed Jun 09, 2021 3:11 pm
https://www.td.com/ca/products-services ... /rates.jsp

I use TD and margin rates for $100K+ USD are 3.75%

I would presume if you have $20 million or more, you could probably get rates of 2% or less.
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CURRENCY TIER RATE CHARGED: IBKR PRO RATE CHARGED: IBKR LITE
USD 0 ≤ 100,000 1.56% (BM + 1.5%) 2.56% (BM + 2.5%)
100,000 ≤ 1,000,000 1.06% (BM + 1%) 2.56% (BM + 2.5%)
1,000,000 ≤ 3,000,000 0.75% (BM + 0.5%)1 2.56% (BM + 2.5%)
3,000,000 ≤ 200,000,000 0.75% (BM + 0.3%)1 2.56% (BM + 2.5%)
> 200,000,000 0.75% (BM + 0.3%) 1,2 2.56% (BM + 2.5%)


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Re: Never Sell = No Capital Gains Strategy?

Post by Silk McCue »

celia wrote: Wed Jun 09, 2021 3:38 pm OP, I’m not sure you’re talking about tax-deferred accounts or not, but these comments refer to tax-deferred:
This isn't about tax deferred accounts. It is driven by today's news from ProPublica regarding leaked tax returns (the video discusses that leak). In this story they discuss this technique of borrowing to live with their assets as collateral while paying minimal income tax and having assets step up upon their passing to the heirs of the estate after paying off the accumulated debt. At least that is close enough to accurate to paint a picture of the technique.

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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by Helmut Spargle »

Seems like the key to this strategy is

Step 1. Become super wealthy
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by hnd »

The uber wealthy can and do borrow against the untaxed appreciated value of their wealth. But how do they pay those loans back? They still do. just like we do when we borrow against appreciated value on our property.

This is I imagine off the propublica article that is going to make a bunch of people mad.

this was spread around at work. i told them look. even if we could untether the wealthy from the grips of the gvt, the gvt is not going to financially outsmart wealthy people. like try and become uberwealthy. the work ethic, drive and intelligence of these people are insane.
Last edited by hnd on Wed Jun 09, 2021 4:16 pm, edited 1 time in total.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by amphora »

I think it's helpful to run the numbers on something like this. A margin loan is like a reverse bond, not a mortgage.

The hypothetical wealthy person has a $100 M portfolio and takes out a $10 M margin loan at 2 % interest and the portfolio grows at 6 % per year. Each year, $200 K in interest is paid to the bank, which is tax deductible against income. After 20 years, the portfolio has grown to $320 M, and $4M in interest has paid. Rather than repay the $10 M balance after 20 years, the balance can be rolled over into another margin loan and another $22 M can be borrowed while only borrowing against 10% of the portfolio.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by gobel »

How is this different from a regular person taking out a mortgage to avoid having to liquidate their stock holdings to buy a house? Should they be forced to realize any holdings they have first before qualifying for a mortgage?
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by techcrium »

gobel wrote: Wed Jun 09, 2021 4:16 pm How is this different from a regular person taking out a mortgage to avoid having to liquidate their stock holdings to buy a house? Should they be forced to realize any holdings they have first before qualifying for a mortgage?
There is nothing wrong with taking a mortgage. That is why I am asking this as a viable strategy then to berate and be angry at wealthy people...
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by furnace »

techcrium wrote: Wed Jun 09, 2021 2:46 pm What do you think about the the never-sell-and-thus-incur-zero-capital-gains strategy?
Apparently it is what the ultra wealthy are doing.
You are spot on. The wealthy borrow to spend. Selling would trigger income taxes. The article below goes in depth into this issue.

https://www.propublica.org/article/the- ... income-tax
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by Somethingwitty92912 »

92irish wrote: Wed Jun 09, 2021 3:41 pm Life insurance salesman have been promoting a similar concept with whole life insurance where the policy holder can borrow against the cash value. So, when you borrow against and get cash from your policy there is no tax, and when you die all the appreciation passes tax free to your heirs.

I am not a fan of life insurance, but I will say this is a pretty nice tax planning opportunity the insurance lobby has arranged for itself.
Can you explain this like I am five years old please?
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by Rob Bertram »

Soon2BXProgrammer wrote: Wed Jun 09, 2021 3:49 pm the left rate is the pro account, $120 a year fee if you don't trade.. the lite is free
I believe that $10/month maintenance fee is waived for accounts with more than $100k net value. No one should choose to use the "lite" version with this strategy. https://www.interactivebrokers.com/en/index.php?f=4969

For the record, this is an amazingly smart strategy and easily accessible for people with retirement-sized accounts. You don't have to be super wealthy.
Small levels of leverage will never risk your entire portfolio. For people with taxable accounts, margin loans make great sense as the interest offsets capital gains. (More room for Roth conversions if you are living off of dividends!) Tax-advantaged accounts can use futures to maintain their market position while taking minimum distributions from the account.

Hopefully, people will convert their Traditional (tax-deferred) accounts to Roth before the RMD becomes too large.

For anyone who objects to this strategy, could you provide data and math to explain your perspective?
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by alex_686 »

This is a viable strategy.

There are better variations of this however.
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Ultra rich avoiding taxes (Propublica leak)

Post by international001 »

[This topic has been merged into the existing active thread already on the same topic- Mod Misenplace]

I'm just interested in the loan part

https://www.cnn.com/2021/06/08/politics ... index.html
Tax avoidance strategies. The report does show how the wealthy finance their lifestyles with loans taken against assets, like real estate or stocks, rather than realizing the value of an asset. They'll pay less to the bank in interest than they would to the government in income tax.
Can somebody explain how this work?
If you take a loan with your stocks as collateral, you still need to sell some of your stocks to pay your loans, no? This would be some taxable income.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by finite_difference »

hnd wrote: Wed Jun 09, 2021 4:15 pm The uber wealthy can and do borrow against the untaxed appreciated value of their wealth. But how do they pay those loans back? They still do. just like we do when we borrow against appreciated value on our property.

This is I imagine off the propublica article that is going to make a bunch of people mad.

this was spread around at work. i told them look. even if we could untether the wealthy from the grips of the gvt, the gvt is not going to financially outsmart wealthy people. like try and become uberwealthy. the work ethic, drive and intelligence of these people are insane.
I’d say they have work ethic and drive and greed.

If they were really as smart as you claim, they’d realize that spending their wealth to solve problems would be a lot more beneficial for their great-grandkids, great-great-grandkids and so on, rather than hoarding it for themselves. (Of course, some of them are doing that.)
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Re: Ultra rich avoiding taxes (Propublica leak)

Post by LFKB »

I do this. It's simple.

I have a loan management account through Merrill, where I hold my stocks.

They will loan me up to 65% of my stock value at a 1.5% interest rate. It's simple and I have a checkbook that I can use to access the money whenever I need it.

So if I have $1M in stocks and that $1M goes up in value to $2M, I can borrow up to $1.3M (65% of the $2M) against it and pay 1.5%.

Alternatively, if I wanted to sell shares to access the capital, I would have to pay a massive capital gains tax.

With interest rates as low as they are it is an absolute no brainer

This isn't some complex tax scheme of the rich. Anyone can do it.
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Re: Ultra rich avoiding taxes (Propublica leak)

Post by Horton »

LFKB wrote: Wed Jun 09, 2021 4:46 pm I do this. It's simple.

I have a loan management account through Merrill, where I hold my stocks.

They will loan me up to 65% of my stock value at a 1.5% interest rate. It's simple and I have a checkbook that I can use to access the money whenever I need it.

So if I have $1M in stocks and that $1M goes up in value to $2M, I can borrow up to $1.3M (65% of the $2M) against it and pay 1.5%.

Alternatively, if I wanted to sell shares to access the capital, I would have to pay a massive capital gains tax.

With interest rates as low as they are it is an absolute no brainer

This isn't some complex tax scheme of the rich. Anyone can do it.
Indeed. The OP can learn more here:

https://thefinancebuff.com/interactive- ... count.html
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by hnd »

finite_difference wrote: Wed Jun 09, 2021 4:45 pm
hnd wrote: Wed Jun 09, 2021 4:15 pm The uber wealthy can and do borrow against the untaxed appreciated value of their wealth. But how do they pay those loans back? They still do. just like we do when we borrow against appreciated value on our property.

This is I imagine off the propublica article that is going to make a bunch of people mad.

this was spread around at work. i told them look. even if we could untether the wealthy from the grips of the gvt, the gvt is not going to financially outsmart wealthy people. like try and become uberwealthy. the work ethic, drive and intelligence of these people are insane.
I’d say they have work ethic and drive and greed.

If they were really as smart as you claim, they’d realize that spending their wealth to solve problems would be a lot more beneficial for their great-grandkids, great-great-grandkids and so on, rather than hoarding it for themselves. (Of course, some of them are doing that.)
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by randomguy »

Rob Bertram wrote: Wed Jun 09, 2021 4:26 pm For anyone who objects to this strategy, could you provide data and math to explain your perspective?
You would need to plot out how this scheme worked out for say the 1966 retiree or the 2000 one. How does it work when you retire, the markets are flat for 15 years, and you are holding growing debt that you are paying 10%+ on? Or even in the case where the market is just flat for 10 years and rates are sort of low.... Some like the 1955 retiree might be the worst case. The build up a big pile of debt during the first 15 years and then hit a period where the portfolio doesn't grow but the debt does.

There is no doubt if you can borrow at 2% and make 7%+, you will do fine. Margin is a great move most of the time. The problem is always the times where it isn't and you need to be able to handle them. Take our 1955 guy with some sort of made up numbers but in the ballpark. They watched their portfolio go from 1 million to 4 million (hey a ton of money back then) and their debt go from 0 to 700k (30k/year at 4%). Over the next 10 years the market is flat but interest rates go to say 8% (margin rates were probably higher). You now hit 1980 with 4 million bucks and like 2.3 million dollars (700k+~45k/year that is growing) in debt. You are now in a pretty sketch situation. You need to be talking out like 70k/year to pay your bills and you also need 184k/year to pay your interest. Stocks drop 50%, How do you plan of handling your margin call without paying an absurd amount of taxes?

Obviously that is very, very simplified. As an individual I would worry that I am making choices that I can't undo (i.e. the tax burden of selling 1 million dollars in 1 year would be incredibly expensive versus paying 15%) and might be hard to run when I am 90. If I had billions so I had a <1% SWR and a team of people running my accounts, I would have no problem with it. Having to run the system myself, I am not so sure I will be able to do it later in life.

If you believe leverage like this isn't an issue, how much have you leverage up your portfolio today? Why aren't you borrowing 3%/year (for example) and investing it so you will be all that additional money when you retire. Sometimes I do ask myself that question. Maybe moderate leverage is the best way of going. I just have a feeling though that it is the type of thing that woks out 95% of the time and blows up the other 5%.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by Somethingwitty92912 »

alex_686 wrote: Wed Jun 09, 2021 4:27 pm This is a viable strategy.

There are better variations of this however.
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Re: Ultra rich avoiding taxes (Propublica leak)

Post by Clever_Username »

Hmmm.. I've been realizing long-term capital gains in my taxable to pay monthly expenses in order to allow me to contribute more to tax-advantaged plans through my employer (I have an MBR available, among other things). Maybe I should be doing this trick instead.
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Re: Ultra rich avoiding taxes (Propublica leak)

Post by Random Poster »

LFKB wrote: Wed Jun 09, 2021 4:46 pm I do this. It's simple.

I have a loan management account through Merrill, where I hold my stocks.

They will loan me up to 65% of my stock value at a 1.5% interest rate. It's simple and I have a checkbook that I can use to access the money whenever I need it.
If you use any of the loan proceeds (say, by writing a check), how do you pay the loan back without incurring a taxable event?

If selling shares would cause you to incur capital gain taxes, how does the loan (which presumably you have to pay back, no?) keep your from selling anything?
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by Rex66 »

92irish wrote: Wed Jun 09, 2021 3:41 pm Life insurance salesman have been promoting a similar concept with whole life insurance where the policy holder can borrow against the cash value. So, when you borrow against and get cash from your policy there is no tax, and when you die all the appreciation passes tax free to your heirs.

I am not a fan of life insurance, but I will say this is a pretty nice tax planning opportunity the insurance lobby has arranged for itself.
except the loan rates are a lot more than the even illustrated return rates (not even talking the low guaranteed rates)

you easily pay more money in loan interest then you would in taxes

that strategy is only useful in the last few years of life when you need the money but arent going to live long enough for the interest to be greater than the taxes

then you have to consider you had multiple decades of crap returns just to get to that point
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Re: Ultra rich avoiding taxes (Propublica leak)

Post by Horton »

Random Poster wrote: Wed Jun 09, 2021 5:07 pm
LFKB wrote: Wed Jun 09, 2021 4:46 pm I do this. It's simple.

I have a loan management account through Merrill, where I hold my stocks.

They will loan me up to 65% of my stock value at a 1.5% interest rate. It's simple and I have a checkbook that I can use to access the money whenever I need it.
If you use any of the loan proceeds (say, by writing a check), how do you pay the loan back without incurring a taxable event?

If selling shares would cause you to incur capital gain taxes, how does the loan (which presumably you have to pay back, no?) keep your from selling anything?
I assume via a paycheck, or income source. Pay it the same way as any loan.
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by Rex66 »

Somethingwitty92912 wrote: Wed Jun 09, 2021 4:25 pm
92irish wrote: Wed Jun 09, 2021 3:41 pm Life insurance salesman have been promoting a similar concept with whole life insurance where the policy holder can borrow against the cash value. So, when you borrow against and get cash from your policy there is no tax, and when you die all the appreciation passes tax free to your heirs.

I am not a fan of life insurance, but I will say this is a pretty nice tax planning opportunity the insurance lobby has arranged for itself.
Can you explain this like I am five years old please?
permanent life insurance allows you to take loans against the cash value in the policy. the insurance companies love it. In fact its almost 10% of their profits. Every loan in the US is tax free. The problem is the interest compounds over time and the interest is more than the guaranteed and even illustrated rates of return.
ZMonet
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Joined: Sun Dec 15, 2019 2:43 pm

Re: Ultra rich avoiding taxes (Propublica leak)

Post by ZMonet »

Is there anything similar to a margin call? Say you have a $1.3 million loan on $2 million in stocks. Market halves so you now have a $1.3 million loan on $1 million in stocks. Is there forced liquidation? If not, this seems like a no brainer over a HELOC and maybe even a home loan.
AlohaJoe
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Re: Ultra rich avoiding taxes (Propublica leak)

Post by AlohaJoe »

Random Poster wrote: Wed Jun 09, 2021 5:07 pm
LFKB wrote: Wed Jun 09, 2021 4:46 pm I do this. It's simple.

I have a loan management account through Merrill, where I hold my stocks.

They will loan me up to 65% of my stock value at a 1.5% interest rate. It's simple and I have a checkbook that I can use to access the money whenever I need it.
If you use any of the loan proceeds (say, by writing a check), how do you pay the loan back without incurring a taxable event?
You don't pay back anything.

You die.

Your assets have their basis stepped up.

Your estate sells some assets and pays $0 tax because the basis was just stepped up.

Your estate settles debts, including the asset backed loan.
Misenplace
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Re: Super Wealthy: Never Sell = No Capital Gains Strategy?

Post by Misenplace »

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