Buy, Borrow, Die Tax Strategy: How to Repay the Loan
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- Опубликовано: 15 июл 2024
- The Buy, Borrow, Die strategy is the best tax planning strategy. You can use this strategy to build wealth while paying little to no tax. In connection with using this strategy, you will need to take a loan out against an asset you own. Watch this video to understand how you should think about ways to repay the loan when you use Buy, Borrow, Die for your investments.
What is the Buy, Borrow, Die Tax Strategy? ▶️ • Never Pay Taxes Again ...
Intro to SBLOCs ▶️ • Intro to SBLOCs
Using an SBLOC to Invest in Real Estate ▶️ • Example of How You Can...
Buy, Borrow, Die Tax Strategy Course ▶️ taxplanninghq.com/buy-borrow-...
Video Contents:
00:00 - Intro
02:32 - Recap: What is the Buy, Borrow, Die Strategy?
06:07 - How Do I Repay the Loan?
12:41 - Common Variations of Buy, Borrow, Die
20:19 - Double-Dip Approach
⚠️ Exercise caution before using this strategy. Do your own research and make sure you fully understand the risks you are undertaking!
💡 I do not work with clients or offer any consulting services. If you want to learn more about the best tax and investment strategies, subscribe to my channel and check out these courses ▶️ sharonwinsmith.com/courses/
The information provided in this video is owned by Winsmith Tax LLC and is solely for informational and educational purposes. It is not intended as investment, legal, or financial advice. Always consult with a professional familiar with your unique situation, or conduct your own research before making any decisions. We might receive commissions for recommending certain products or services.
Buy, Borrow, Die Tax Strategy course ▶ taxplanninghq.com/buy-borrow-die/
So much value in this video thanks 🙏
Thanks!
I love watching your videos! They're very helpful! Is there a reason why you never mention HELOCs when using this strategy? I'm still pretty new in my investing career, but I've used a HELOC and I found it helpful. Thanks again!
Cause HELOC has a pay down period an also delinquency of a HELOC payment could impact your credit. SBLOC is independent from both of those factors since you can hold the loan for life and your credit is unaffected.
Hi Sharon. I enjoy your content. As I research the SBLOC it seems to me that M1 finance is easier to use than IBKR. M1 also allows up to 50% limit and a 25% maintenance requirement. On the Interactive Broker site, I cannot even get the "clunky" calculater to work properly. Also, question, if we get dividends from our SBLOC securities account are they treated differently by the IRS? I was reading something about that but I'm confused if the different treatment is from the account OR if its for someone who buys securities on margin.
How do you avoid tax in an investment fund? Right now I’m looking for good real estate funds to invest in (I’m accredited), but as I understand it any of the mailbox money I’d get from it would be taxed at normal income tax rates.
Follow up question would be how to find a good real estate fund? You say to avoid YTers but outside of YT idk where to look. I almost went for Ken McElroy’s fund but you spooked me.
Hi..i would like to ask if non us residents who open LLC in US to trade in stocks and have certain amount of shares..are they eligible for SBLOC as non US residents?
What about high yield dividend etf stock, is getting a loan better than using my own cash. An let my cash grow somewhere else and just make the monthly payment of loan( an I I would be able to pay off the loan) and possibly a tax deduction somewhere…..?
Instead of using my own cash, probably missing on some tax benefits instead by using a loan
What real estate fund are you talking about that is tax efficient?
Selling covered calls can make more than enough to cover the loan
So if you had a SBLOC and you used dividends to pay the interest and principal each month do you pay taxes on the dividends used to pay back the loan ?
From my understanding. Yes.
Buy, borrow die strikes me as a tax efficient and asset-preservation efficient strategy, but maybe not a retirement efficient strategy. If you already have more wealth than you'd need to retire comfortably on, then buy, borrow die makes sense -- you pay less taxes and your heir net more wealth.
But if you actually need that money to retire on it may be less efficient, because you can only borrow up to around half your assets, while if you simply drew them down in retirement you can spend them all. For the super-rich that won't matter, but for those a few notches down - who may still have a lot of assets in dollar terms -- it could. The tax efficiency means you wouldn't have only half as much, but overall it's probably less.
Sharon, what are your thoughts on using SBLOC to leverage up your S&P500 position to 1.25x or even 1.35x? Do you view any level of margin leverage prudent?
I don't think she's prompting buying stocks on margin. That's something else.
Just buy upro instead
I use SBLOCs in my stock portfolio to amplify my holdings. The SP500 doesn't create the best cash flow but it still arbitrages profitably long term. Borrow at 6-7% and it averages 8-10+%. To see if I can afford the debt I look at the interest payment plus I pay an additional 20% to speed up the pay down. For example, 100k borrowed at 7.25% would be around $605 per month in interest. By paying a little extra up to $720, it not only pays itself off 2-3x as fast but even if rates stay at 7.25% my average interest over the 24 years it would take to pay off is 4.65%. So I use the 4.65% instead of the 7.25% when seeing if it is profitable. I also invest in some dividend growth stocks that both appreciate but have a growing dividend that can be used to offset payments. Stocks like AAPL, MSFT, TXN, HD, LOW, COST.
Also, another thing to think about is usually you can only borrow 50% of your portfolio. So if you have 200k you can borrow 100k. So say you are getting 3% dividends overall you are earning 3% on 300k to pay 7.25% interest on the 100k. So I look at it as if my original portfolio value is like a paid off rental property that can help pay down the 2nd rental property. Good luck!
@@aceflamez00just buy TQQQ instead
Is the interest of the margin loan tax deductible ? Thank you
Only if used to buy more assets, not if the debt is used for personal expenses
Whats the minimum net worth needed to use the buy borrow die strategy ?
You can borrow with even 1000 dollars invested
It’s 2K and that gives you like 1K to borrow due to reg t 50% rules
You guys are talking about M1 Borrow right?
@@P.I.P.E.L.I.N.E_Podcast You can do it on M1 or Interactive brokers, they usually have the lowest rates. Schwab, fidelity, and etc sucks.
@@P.I.P.E.L.I.N.E_Podcast Well you could use that or interactive brokers
What happens to the loan when I die? I've been through the video twice and didn't hear anything about how my estate handles the loan. I know my heirs get a stepped-up basis in the stocks I own, but won't the stocks have to be sold to satisfy the loan? Is that not a taxable event to the estate?
They inherit the stocks and sell when step up and pay if off if they want. You’re not required to pay off a SBLOC when you die, your kids can just continue using the account.
Your life insurance will kick in and pay off the entire loan. Obviously only if you took out enough life insurance.
@@PieterSadie I've heard about using life insurance as an option, but as a 66-year-old male with a history of three different kinds of cancer, I suspect life insurance will be exorbitantly expensive.
@@aceflamez00 That is interesting. Do you have a citation for that? Typically, heirs do not take on debt. Any debt not covered by the estate becomes the problem for the lender, not the heirs. I've never heard an heir voluntarily taking on debt. However, I can see that working if the stock and the loans are in the name of a trust.
How do you not pay taxes on the real estate funds that I’m assuming pay large dividends?
Real estate funds don't pay dividends
@@sharonwinsmithO is the most popular REIT and pays 6% anual dividend yield
A real estate fund and a REIT are two very different types of investments.
@@sharonwinsmith would you care to elaborate? Bottom line is how much yield you can get
I would love to create content with you.. how can we get in contact?
She gave you her website I the first comment, email her!