Never Pay Taxes Again With The Buy, Borrow, Die Tax Planning Strategy
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- Опубликовано: 6 июл 2024
- How to Repay the Loan ▶️ • Buy, Borrow, Die Tax S...
Be Your Own Bank ▶️ • Be Your Own Bank
Take the Buy, Borrow, Die Tax Strategy Course - taxplanninghq.com/buy-borrow-...
How to Handle Interest Payments on Your SBLOC ▶️ • How to Handle Interest...
Learn about the Buy, Borrow, Die tax planning strategy used by some of the wealthiest people in the world. This video will teach you how to buy assets and avoid ever paying any income tax on the appreciation in value of your investment. I also walk you through real life examples to explain how you can use the strategy in practice and what benefits the strategy provides.
Read more about the Buy, Borrow, Die Strategy here - taxplanninghq.com/a-primer-on...
Interactive Brokers ("IBKR") - www.interactivebrokers.com/ [Low interest rates on portfolio line of credit]
Video Content
00:00 - What is the Buy, Borrow, Die Strategy
08:05 - Example of How the Strategy Works
13:10 - How I Use the Strategy with My Brokerage Accounts
29:43 - How Billionaires Use the Strategy
36:15 - How Business Owners Can Use the Strategy
⚠️ 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.
How to Repay the Loan ▶ ruclips.net/video/He9dErfm_qs/видео.html
How are you only at 300 subs?! This video holds more value than 98% of bs "finance youtubers" keep talking about. Thanks for ironing out some question I had about this strategy! Keep up the fantastic work, and hope you get through to thousands of people.
Thank you for your kind words! Appreciate it!
Value usually doesn’t run up numbers . Great video !!!!❤
Thank you for watching and your kind words! 😀
Up to almost 5k subs as of June 2024. This is my first view on this channel and I expect it’ll keep growing if she keeps putting out quality content.
5k now!
Been doing this for the last 65 years. Do rentals first. Get double tax exemptions. Quadruple tax
write-off, if one counts #1 Deprecation (really only good for 10 years because of inflation, basis
do not change) #2 Loan interest is tax deductible, even on commercial RE. #3 Low cost rentals
often are RE taxed less (depending on region). #4 Repairs, materials, utilities, management, RE
taxes, all write-offs. In my retirement, (I'm 89) Farming has all the benefits of low cost residential
plus more AG tax benefits then I have room for here.
I'm a real estate guy and hated the idea of stocks for a long time. Selling them, paying taxes, then missing out on future appreciation. This solves all of those problems. I've started portfolio holding VOO, I'm going to pack that full of shares and use it buy more real estate later on.
Awesome! I also do a good bit of the VOO & real estate mix strategy. Thanks for watching!
Why not vfiax?
@@CrazyCamo
Can't do options on it to protect positions nor to make extra income.
Can't buy or sell it at better prices taking advantage of short price spikes in the middle of the day.
I've been investing this way for quite a while . Has worked out well .
So helpful. Thank you. I've heard of this but didn't really understand it much. You created a lot of clarity.
39:10 Ironically, a Robert Kiyosaki rabbit hole led me to buy borrow die. As most ppl know in this space, his mantra is using debt to buy income-generating assets. I’ve decided to translate that to the stock market for the time being. I’m only 20 though so l have time to diversify into other asset classes.
Wow! Very succinctly explained. Thank you!!
Wow did not know the step up part. Bravo.
OMG, THAT was AWESOME!!🔥🔥🔥 SUBSCRIBED!! You literally answered every question that I had about this, especially when you detailed how mid sized businesses could do it. Thanks you SO much!! Cheers!!
Thanks for watching!
Very valuable and easy to understand information. Subbed!
Thank you so much for your kind words! 😀
Great wisdom! I am following you now and about to completely rebalance my portfolio and and start using this method.
Fantastic!
Be Your Own Bank ▶ ruclips.net/video/w__YGvMSG0A/видео.html
Great video!!!! We should teach this in the high schools.
Thanks
So step one is building up enough cash with assets ie stocks ETF before borrowing would be big enough to do anything. I definitely understand how to grow money quickly in the market. Most of money is in IRAs. I know the buy borrow and die can not be done in IRAs. We might start funding more in our regular brokerage account.
I love this information, thank you for the clarity.
Glad it was helpful!
Excellent video. I wish you much success on RUclips.
Thank you so much!
Love this video, very informative ☝🏾
I am so glad I found your channel. I’ve learned so much from you.
Thank You
Thank you for your kind words! :)
Thanks Sharon. Huge information!
Awesome..! Learned something more valuable , Thanks for sharing the hidden knowledge in easy way. One more “Sub” added .
You rock thank 🙏 you for a worth of knowledge...my god straight too the point no bs...best channel.👍
Thank so much! Appreciate your kind words!
Thank you for explaining this so thoroughly. I knew faintly about this option that the wealthy use but were not sure what assets to anchor from. Did not know that stocks were an option. Many thanks. I subscribed ❣️
You made some pretty good points that we need more info on.
1. If you don't pay yourself, what bank will loan against an asset.
I build houses. Its value is 900k. I don't want to sell or rent it. Id rather just sit on it. I don't owe a penny on it. I would like to build another. The cost of build was 425k. Now If I can barrow against the asset, I could build another. Another 425k would build the same house valued at 900k.
I don't pay myself anything so I don't have an income for a bank to loan against.
My only option is to sell and build 2. I can exclude 500k (2 people) plus the 425k investment and not pay no taxes every 2 years.
I have to wait 2 years to sell the next one to repeat. What other strategy or there so I can build 2 a year but need capital faster?
I would check out of the course as it covers using Buy, Borrow, Die with real estate. taxplanninghq.com/buy-borrow-die/
Well done, just subscribed👍
OMG! That was fantastic🙏
Thank you for watching - glad it was helpful!
A literal goldmine of innfo... To build a goldmine! Thank you!!!!
Thank you for watching!
Great video very helpful! I have a decent portfolio and is growing I been flipping homes but I been doing it all wrong. Following
Thank you for watching! Will have a lot more on these topics in the future as well.
Thanks for your service
Thank you for watching! 👊
Awesome video and knowledge share!!
Thank you!! 🙏🏻
I get how the step-up in basis during the inheritance is an advantage. But the debt against the stocks is also inherited, which would cancel out the wealth gain because of the inherited shares?
This sounds like a version of the infinite banking concept but in this case you’re describing but you’re borrowing from a lender and not against your death benefit.
I've always thought of the SBLOC approach to implementing Buy, Borrow, Die as a better approach than the Infinite Banking strategy to accomplish the same objectives. With that said, I think Infinite Banking is generally a scam with the way it is used in practice and marketed by insurance agents and influencers.
Great info thank you
Thanks for watching!
Excellent video
Thank you very much!
Best explanation of BBD ever
Thank you!!
Thank you for the wonder investment technique!
So, the step up basis is something automatic when passed down to the heir or I have to apply for something or do anything for that to work?
Thanks in advance!
Thank you for watching! The step up is the way the law works when someone passes away. So the heir's basis is automatically stepped up to the fair market value of the asset on the date of death. This happens automatically by operation of the way the law works. However, there may be some tax filings required for the estate itself. You don't technically need to apply for the step up. But depending on the size of the estate, how the estate is set up, and what assets the estate has, there could be filing requirements for the estate itself.
How would one prove income to live in an apartment or buy a house?
I looked into SBLOCs but it seemed like most of the brokerages require a 100k portfolio and above. Any back door to this or brokerages with lower portfolio limit requirements?
great content. is there an advantage to portfolio margin over selling box spreads to generate the cash? i think the interest is more favorable.
This strategy seems great but I am unsure about something. When you take out a loan against equities you have to pay interest. Obviously, if you took out a big loan your interest payments are going to be large. And you have to have a second source of income to make those big payments. So, while Jeff Bezos pays little tax on his primary source of income, he must pay a lot more taxes on his secondary source of income? Doesn’t that kinda defeat the purpose of having a small primary source of income? What am I not understanding?
I've been getting a lot of similar questions. I have a video coming out in a few weeks that will address this point. But in the meantime, it's hard to answer this without knowing which way the strategy is being used. If you are doing an SBLOC for example, you don't have to make any interest or principal payments if you don't want to. So, firstly - no, you don't necessarily need a secondary source to make payments. Nevertheless, even if you do have a secondary source of income to use for making payments (if you choose to pay down principal and/or not let the interest accrue for an SBLOC or you use the strategy with a non-SBLOC type of loan requiring current payments), why would you assume the person is paying tax on the secondary source of income? I have tons of different income streams and I hardly ever pay any income tax. I would never invest my money or have a situation where I had any source of income that was going to be tax inefficient.
The best way to use the BBD strategy is the double-dip approach. In that case, you borrow against Asset 1 and invest in Asset 2. Hopefully, you are investing your money in a way that you are not paying material tax on earnings (Asset 2 in this case). Here is a link to a video where I talk about a strategy you can use this with where you shouldn't be paying any net tax ▶️ ruclips.net/video/3ZnjNdW3Yck/видео.html
The majority of people are probably not going to use this strategy the way I do or the way Jeff Bezos does. They are likely to have a high-taxed source of primary income (e.g., W-2 job) and then use the BBD strategy to invest their money in a way they never pay tax again on the future returns. In any event, you can set up this strategy in a way that you literally never pay a dime of income tax again.
The dividends or interest pay the loan. I'm assuming the assets generate income
How much stock do you have to have to borrow against it?
thanks for the video. great information for newbie like me. When you said when a portfolio drips below margin and bank start selling off your stocks to recover the assert. if there are capital gains on some of the positions in the portfolio. who paid the capital gain tax?
You would be liable for the capital gains tax. One reason why you want to make sure you avoid a margin call and have a plan in place in the event you get close to one in the future.
Take out credit life insurance on the SBLOC so the next generation can have 100% possession of the portfolio?
My 401k and IRA does not offer loans. Do you know some that do?
I had heard of crypto RUclipsrs using SB locs to avoid selling their Bitcoin when it appreciates during the 4-year cycle. But I didn't know that you could just use it for a regular stock portfolio. It seems like a really good strategy to diversify your assets. I want to build multiple dividend income portfolio and I think this is the way that I will use to do that. It just sucks that you still have to pay taxes on the dividends. Thank you for the insight and the advice. Subscribed❤
A less risky asset is the etf VT, everyone should own it.
What is step up basis? is possible to do that in Spain? I have interactive brokers too.
I’m living on SBLoC and using it to fund my life
👍👍
@@sharonwinsmithhow do you repay the original loan?
If you do all your investments through a Roth IRA or a Roth 401k, (which can be anything. From crypto, stocks, real estate and more) you NEVER pay taxes.
But you still have RMDs on IRAs....so I am not sure how much benefit is there.
But you pay taxes on the funds going into the Roth account. You don’t pay when you pull funds later on, but you do pay upfront.
@@mortviolette284 Agreed. If I had one piece of advice for any young person, it would be to fund a Roth while earnings are low, i.e., taxes nearly non existent. It could also apply to someone who is unemployed. The trick is to save the money over time, and put it in the Roth IRA during a low earnings period. I did not have that option...too old. But, I have seen 10,000 turn into 100,000 in 30 years in a non IRA account, meaning, I have been paying taxes on those gains for 30 years.
My FA instructed me on this. I got an SBLOC but haven’t used it yet. My SBLOC is based on my brokerage account. How do you feel about borrowing against that but then never paying back the loan while it accrues interest? That’s what my understanding is. That it’s paid back after you die and pulled from your assets.
I never pay down my SBLOC and let the interest accrue.
How long is the initial loan for? Doesn’t the loan become due after a 12 or three year period?
Rarely is even mortgage interest used as deduction on my taxes. How is this?
With Buy, Borrow, Die, how is the loan repaid after death? Does the estate have to sell assets to obtain cash to repay? If so, are there capital gains that the estate must pay? Or does the asset under loan get partially liquidated (no tax consequences?) to pay back the loan? Just wondering what the tax consequences are with this strategy. I get that paying back the loan while alive will result in possible tax consequences depending on how you derive the cash to repay, but are there certain strategies to implement if you intend to die with the loan still outstanding?
What kind of account should I put shares in a private company and holding company in? So that an SBLOC can be obtained
This only works if you $100k+ invested when borrowing against your stocks in a brokerage account right?
If you borrow on margin from stocks say in year one and in year 2 pay it back by selling stocks. Are you not taxed when you sell to pay back the margin loan?
Yes - you always pay tax when you sell an asset. The key with the Buy, Borrow, Die strategy is that you never sell the underlying asset (or don't sell for a very long time).
What if the assets or stocks are in a trust when someone dies how is it transfered to the kids? Do they still get tax or do they need to sell it on the day of the death and id they choose not to is it still possible?
Hi, really enjoyed the video! I'm very intrigued by buy, borrow and die and SBLOCs. But the thing I can't seem to wrap my head around is, it's still a loan, so where does one get the cash from to pay it back? And if you have the cash to pay it back, then why take out a loan and incur interest instead of just using the cash you already have to buy another investment?
SBLOCs commonly don't require you to make current payments of principal, and the interest can accrue. There are a number of different reasons and situations why one would use the Buy, Borrow, Die strategy.
@@sharonwinsmith does this mean as long as the assets continues to appreciate, you never have to pay it back?! 😲
@@sharonwinsmith can you make a follow-up video expanding on how SBLOC's work if they dont require you to make current payments of principle? It just seems like a weird loan strategy and i think it could use further explanation for those interested in learning more.
@edwardmacnab354 this video is over 40 mins long... if you don't get the method, it might not be for you.. video is perfect.
Sharon, thanks so much for this information. No heirs here nor do I believe in "poverty/sympathy pimps" aka non-profits. Sadly, don't know when I'm going to die. What strategy do you recommend? My home is paid for, have a small profitable business, and about 500k in stocks. "Buy, borrow, [sell/live]"?
Is there a deadline forr your heirs to sell their shares after you die to not pay taxes, and if they decide to keep the shares and the stocks go up, what would the Tuscan implications be?
Can you do a sbloc on a roth ira?
Is it like buying whole life insurance and borrow from it?
It seems that a well-diversified portfolio would protect against a margin call.
So if you sell something it’s table income ok but if there’s a loan on it it becomes tax free because it’s a debit? How about if you haven’t paid off the asset?
In the example provided, is the Apple stock transferred as collateral?
You don't formally transfer the shares - they would still be held in your brokerage account. However, you are correct that they are collateral if using an SBLOC against those shares.
omg, how this lady on 16k views. All gems in this video
Thanks for watching!
This is fantastic- I was looking into using this method to utilize investments to diversify into real estate
Great way to use Buy, Borrow Die!
I'm curious, what happens to the balance of borrowed money from stocks when you die? Is the balance paid off tax free from the value of the shares? Or can the kids inherit both the stocks and the debt?
It depends on how you have your estate set up - either approach can be done.
so where does the money come from to pay the loan? won't you need some kind of income for that? won't there be taxes on that money? I can see this as a way to delay taxes, but eventually you will have to take some money to pay the debt and then pay taxes on it.
This would all depend on how you are using the strategy.
Ok. But how does Bezos pay off this loan without liquidation of some of his assets? Does he ever pay it off? Or does he use other tax free income generating assets to pay for it. I'm in Canada. I trade in my TFSA which is tax free. Also, when Bezos passes, what happens to this loan? Who pays it, or interest on it?
Is there any way to hedge the variable rate interest using swaps
There could be but I don't generally find this necessary. SBLOC rates are usually quite low and often even lower than mortgage rates.
Could you borrow against your business up to 80% of your annual salary and use the loan for your living expenses and use your salary to pay it off? Would you get any tax benefits from doing it that way or no?
Can i do an sbloc and put the funds in a money market account
You can use the funds from an SBLOC however you want. However, putting the money in something getting no return or low return like a money market account might not make financial sense. I doubt the interest you get in a money market account is going to offset the interest you have to pay on the SBLOC, which would make this a bad strategy.
Thank you for this video! Can you please do a video using this strategy with high yield dividend ETF such as :YieldMax, Defiance, Roundhill etc. ? The Yield on these covered call ETF can range from 20% to 100% or more.
So you don’t pay taxes because there’s a line of credit attached to the property?
Great info and even great explanation. You were clear on not doing this with cryptocurrencies, but now, almost a year later from this video coming out and with BTC ETF’s being approved and ongoing institutional adoption, any change to your opinion?
Thanks for watching! I would still never do this with crypto at this point. It is just too new and too volatile. I am a huge crypto bull but think we are 5-10 years out before I would even consider borrowing against my crypto.
Thanks for your response!
Any strategy for saving on tax with 401k Ma'am ?
Margin call zone is the key for any asset that encounters a hickup then buy if you can on a stock that rebounds from 75% because you know gready pigs got flushed out
Sharon, for an sbloc, you don't have to pay back the interest unless your account starts dropping close to margin call, is that correct?
Correct - you can usually let the interest accrue indefinitely but have to watch out for the margin call threshold as you mentioned.
@sharonwinsmith ok thank you! You have no idea how many months I've been looking for an answer to this!
Too long but i guess if youre a newbie to this really nice! Only thing i'm missing: how do you pay for those interests and principal on the loan or line of credit? Whats the strategy? How does a billionaire do it? I thought dividends at first but if they do it with that they'll get taxed on it...
It depends on how you are using the strategy. I am working on a course that will address a lot of these questions. I hope to have that out in the next few weeks. Thanks for watching!
This reminds me of the collateralized loan i took against my crypto from last cycle.
What if you sell after you borrow against it? You sell and pay off everything you owed. Does that prevent you from paying taxes on the additional amount you borrowed?
You would have to pay tax on the gain when you sell the asset. The outstanding loan wouldn't reduce the tax or gain. The key with the Buy, Borrow, Die strategy is that you never sell the asset.
What if you have no heirs?
If I don't have an income, I have stocks. I borrow from my stock. Am I using the money I borrow to make minimum payments and spend? Once I run out of money. Do I borrow more money?
I wouldn't use this strategy if you don't have income. This is really a strategy used by wealth individuals who have built significant net worth.
Can you make a video about borrowing against a Life insurance. How does it compare to borrowing against assets.
Byw, thank you.
I touched on that in the Be Your Own Bank video. I'm generally not a fan of that strategy. ruclips.net/video/w__YGvMSG0A/видео.html
"Accountant rediscovers leverage"
That's 45 minutes I'll never get back 😩
Hilarious how she says she says she'd never buy on margin ("ToO rIsKy!") when this is literally the same thing from a tax and financial perspective lol
If I have stocks in a different brokerage (Webull) can I go to like chase or another bank/ credit union and borrow against that portfolio?
Or does it have to be with the same brokerage ?
You would need the shares with the brokerage where you are going to borrow from. I use IBKR because they have some of the lowest interest rates out there. Somewhere like Chase is not going to have competitive rates in my experience.
Ahh I see, so if I used ibkr I couldn’t pull out the money and use it in a different brokerage?
correct - you would need to move the stocks to an IBKR account
Okay i see, but i don’t understand how the money being borrowed couldn’t be moved out that brokerage into another brokerage. Also what is the minimum investment amount to do this?
M1 has good rates.
Big assumption is the asset will appreciate steadily till we die. Any downturn, recession, black swan event could ruin this big time. Is that correct assumption?
I would never invest in an asset that wasn't going to steadily appreciate over time. I don't care about temporary downturns with the Buy, Borrow, Die strategy. You have to educate yourself on the strategy and the risks involved and make smart decisions.
Will ETFs be eligible in a brokerage account?
Yes, you should be able to borrow against ETFs if your brokerage firm allows SBLOCs
Hello there is something I didn't understand... Imagine you have a job for 40year and invest a little bit a month on shares... At the end of those 40years you want to enjoy the money you saved/invested...
How will you pay the loan you made to avoid the taxes?
If you want to pay it while you're living you pay it down little by little or if you used your loans correctly and bought an asset, the asset should cashflow the loan. Otherwise, your dividends will most likely cover the interest of whatever loan you have against the port assuming you stay within safe ranges of borrowing (15-25%). When you die who ever gets the portfolio could use to sell at stepped up basis and pay off the loan without paying taxes..
If you are borrowing against shares using an SBLOC, you don't need to pay off the loan.
I'd love to do this with my Bitcoin
Life insurance will pay the full amount of the policy at your death. You can borrow from it as a ploc at 3% from line.
just a question, wont our heirs have to pay back the debt that we have borrowed?
If it is an SBLOC for example, you can set it up where the SBLOC gets paid back or where it remains outstanding and the heirs just continue the same strategy. If shares are sold to pay back the SBLOC, the heirs have a step up in basis so no taxable gain on the sale.
No need, if it is insured!
With any strategy, it all comes down to how much money do you make..
Interest like this is not deductible or is it. How do you pay it back if you’re not having other income.
The interest is deductible if you use the funds for investment or business purposes. How you pay back the loan depends on how you are using the strategy. You can pay it back with any source of income. If it is an SBLOC, you don't have to make principal payments and can leave the loan outstanding indefinitely.
What about crypto?
SBLOC? Another video with an example. Dont forget the bank name that loans the way your saying for a person not claiming an income to avoid taxes.
I dont want to have to use my current income to get approvwd just use assets for loan approval.
I keep my current income as minimal as possible to avoid paying taxes.
I have a course that is solely dedicated to Buy, Borrow, Die and covers using the strategy with real estate and SBLOC. Feel free to check it out if you want a deeper dive into any of these strategies. taxplanninghq.com/buy-borrow-die/
Isn’t there an inheritance tax?
There is, but I'm pretty sure it's for inheritance over $10M.
Can you use this strategy with crypto?
Technically yes you could but I personally won't be borrowing against crypto for a long time. Still too new and volatile.
@sharonwinsmith ok thank you! With the way that you explained this, I think it would be best to use this at the bottom of a bear market, which is ending 2026 to start of 2027. That's when a lot of crypto has completely bottomed out as the sellers are mostly exhausted.
Not sure if this applies to non-Americans.
I'd love to help you make shorts on your channel!
This seems to risky. In case of a recession both your stock and business may crash. And the interest you owe will just keep increasing.
Definitely risky if you don't know what you are doing. I don't care about short term drops in the stock market during a recession because I always have a plan in place for a potential margin call risk. I also wouldn't own or borrow against a business that wasn't recession proof.