Buy, Borrow, Die Tax Strategy: How to Repay the Loan

No video

Buy, Borrow, Die Tax Strategy: How to Repay the Loan

Рет қаралды 10,894

Sharon Winsmith

Күн бұрын

Пікірлер: 55

@sharonwinsmith 2 ай бұрын

Buy, Borrow, Die Tax Strategy course ▶ taxplanninghq.com/buy-borrow-die/

@kylehern5132 2 ай бұрын

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!

@aceflamez00 2 ай бұрын

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.

@zentravel1515 Ай бұрын

So much value in this video thanks 🙏

@nickatnight782 14 күн бұрын

I had a similar question about real estate funds. While they dont pay dividends, at some point it cashes out once the investment comes full circle, how do you avoid taxes on the proceeds? Ive always heard that one of the disadvantages of a real estate fund is that they are less tax efficient than individual real estate properties, etc.

@osvaldoperez6979 2 ай бұрын

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

@m-mart. 2 ай бұрын

Thanks!

@gregoryellis324 2 ай бұрын

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?

@aceflamez00 Ай бұрын

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.

@PieterSadie Ай бұрын

Your life insurance will kick in and pay off the entire loan. Obviously only if you took out enough life insurance.

@gregoryellis324 Ай бұрын

@@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.

@gregoryellis324 Ай бұрын

@@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.

@cyborg_cr7488 28 күн бұрын

It is a taxable event if they sell it. But the real question is what is the taxable amount. For example, if you got shares for 100k, now it is worth 1M, in regular sense, if you sell it, you have to pay tax on 900k. But if they inherited it at that price, which means they accumulated no profit immediately. If they sell it as it is not a taxable profit as profit is 0 in simple terms. They can then settle the loan.

@jnnfrishr 29 күн бұрын

So, recently took out a loan at 11.49% annual interest that I plan to pay off in 2 years, I can invest this money in an asset for a 24-26% annual return. Is this what we are talking about here? Is this a healthy way to live? Is this something that won't ever change in the near/long-term future with tax laws? I'm probably too late in the game to live comfortably for the rest of my life from this strategy, but it may be a strategy that can be passed on to children/grandchildren. It seems that it would take some formal training/education. If this is a strategy that can be learned in a year or two for someone in their twenties or thirties then it would be very worthwhile, however things do change (lifestyle changes, medical issues, etc.) and it would be good to know what to look out for so that this strategy can continue for the next 30+ years.

@thegzak 2 ай бұрын

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.

@barrywittine6513 2 ай бұрын

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.

@Theweightlossdietitian 25 күн бұрын

How to handle ira’s? Anyway to borrow against those?

@pcapazzi 24 күн бұрын

I don’t get it… a bank is loaninfo you that money and charging you interest. If you don’t pay interest aren’t you defaulting on the loan which forces the sale of securities and then causes a taxable event?

@mrbigcat9 24 күн бұрын

Can you write off that interest?

@andrewbiggs8435 2 ай бұрын

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.

@ggkkkgkgkkgkgkg 42 минут бұрын

TLDR Borrow at a low rate, reinvest for a higher rate of return.

@ikhwanikhwan7658 2 ай бұрын

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?

@JH-D4075 2 ай бұрын

Whats the minimum net worth needed to use the buy borrow die strategy ?

@Rnjeazy 2 ай бұрын

You can borrow with even 1000 dollars invested

@aceflamez00 2 ай бұрын

It’s 2K and that gives you like 1K to borrow due to reg t 50% rules

@P.I.P.E.L.I.N.E_Podcast 2 ай бұрын

You guys are talking about M1 Borrow right?

@aceflamez00 2 ай бұрын

@@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.

@aceflamez00 Ай бұрын

@@P.I.P.E.L.I.N.E_Podcast Well you could use that or interactive brokers

@user-ji4os6qn4i Ай бұрын

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 ?

@DEVIL67857 Ай бұрын

From my understanding. Yes.

@925Prophet 2 ай бұрын

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?

@andersonandrew112 2 ай бұрын

I don't think she's prompting buying stocks on margin. That's something else.

@aceflamez00 2 ай бұрын

Just buy upro instead

@TinkerToFIRE 2 ай бұрын

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!

@Sony-ox7wx 2 ай бұрын

@@aceflamez00just buy TQQQ instead

@wesleypipelayer7627 Ай бұрын

So…. If I read you correctly…. I can take out a 7000 $ SBLOC loan on my 30k RollOver IRA account, then use that money to slam into my ROTH IRA in January 1….. Then invest in high yield dividend payers, and growth ETF’s etc to grow that account as fast as possible all year long….. then just make payments of about 580 all year long to pay it off before December, so I can do it all again next year…… And if anything goes wrong, I can just pull my contributions out of my Roth IRA to pay off the loan , and just be done with it….. How does that sound for a plan ??

@gregoryellis324 28 күн бұрын

Can you use SBLOC money to contribute to a Roth IRA? According to Nerdwallet, "You can’t, however, use your SBLOC to buy other securities or repay margin loans."

@wesleypipelayer7627 28 күн бұрын

@@gregoryellis324 … My brokerage is with fidelity. They have a 100k minimum SBLOC with a 50%max on my account. So I’d have to have 200k to be able to do that. About 6x what I have, so basically completely out of my league. Need to see if I can find some quality Real estate funds or private equity funds in my price range. But it certainly doesn’t look hopeful from what I’ve seen so far. Pretty much outta my depth with these things. Oh well. Maybe someday.