Buy, Borrow, Die: The Billionaire’s Secret to Tax-Free Living
Tax Tips / Liquidity Mgmt
Buy, Borrow, Die: The Billionaire’s Secret to Tax-Free Living
💡 Executive Summary
- Problem: Selling appreciated assets (Stocks, Real Estate) to fund your lifestyle triggers Capital Gains Tax (23.8%+).
- Solution: Buy assets, Borrow against them (SBLOC) at low rates to pay for life, and hold until you Die.
- Result: Loan is repaid from the estate, and “Step-up in Basis” wipes out the Capital Gains Tax entirely.
⚠️ THE “MARGIN CALL” RISK
Leverage cuts both ways. If the value of your pledged assets drops significantly (e.g., market crash), the bank will demand immediate repayment. Safe LTV (Loan-to-Value) is < 50%. Never borrow to the max.
Leverage cuts both ways. If the value of your pledged assets drops significantly (e.g., market crash), the bank will demand immediate repayment. Safe LTV (Loan-to-Value) is < 50%. Never borrow to the max.
Why do UHNW individuals (Tier L4) rarely sell stock? Because selling is a taxable event; borrowing is not. “Buy, Borrow, Die” is not a catchy slogan; it is the fundamental operating system of dynastic wealth preservation.
🧐 Core Tool: SBLOC
A Securities-Based Line of Credit (SBLOC) is different from a Margin Loan. It is non-purpose (cannot be used to buy more stock) but offers significantly lower rates (e.g., SOFR + Spread) and flexible repayment (Interest Only).
A Securities-Based Line of Credit (SBLOC) is different from a Margin Loan. It is non-purpose (cannot be used to buy more stock) but offers significantly lower rates (e.g., SOFR + Spread) and flexible repayment (Interest Only).
Performance Simulation
Cost of $5M Cash (Lifestyle Spend)
Sell Stock (23.8% Tax)
$1.2M Immediate Cost
Borrow (SBLOC @ 6%)
$300k/yr Cost (No Tax Event)
Deferral Power
SBLOC vs. Margin Loan
| Feature | Margin Loan (Retail) | SBLOC (Private Banking) |
|---|---|---|
| Primary Use | Buy more stock | Buy Real Estate / Lifestyle |
| Interest Rate | High (Base + High Spread) | Low (SOFR + Low Spread) |
| Tax Treatment | Invest. Interest Expense* | Invest. Interest Expense* |
“The poor pay interest to survive. The rich pay interest to avoid taxes. The difference is in the collateral.”
🔗 Related BMT Playbooks (Internal)
🛡️ The Endgame: Understanding Step-up in Basis ⚖️ Insurance Version: Premium Financing (Borrowing for Policies) ✅ Asset Strategy: Combining Exchange Funds with SBLOC🏛️ Institutional Resources (External)
📜 Legal Text: IRC § 163 (Interest Deduction Rules) 🏛️ SEC Alert: Securities-Based Lines of Credit Risks ⚖️ Regulation U: Credit by Banks for Purchasing Securities
BMT designs for tax reality, not theory.