Buy Borrow Die

About Buy Borrow Die

Buy borrow die is a tax avoidance strategy used by ultra wealthy Americans. The strategy works as follows. Buy appreciating assets like stocks and real estate. Borrow against them to fund living expenses, since loans are not taxable. Die, at which point the assets receive a step up in basis, eliminating all capital gains tax. Heirs inherit tax free. This strategy allows billionaires to pay minimal income tax on their growing wealth. ProPublica reporting in 2021 revealed that Jeff Bezos, Elon Musk, and other billionaires paid little or no federal income tax in some years despite growing wealth by billions. The strategy exploits three features of the tax code: low capital gains rates, tax free borrowing, and stepped up basis at death. Closing these loopholes is a goal of many tax reform proposals.