This was EXACTLY my first thought. The "income" is never recognized

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Oct 28, 2021
10:52:44am

dratax All-American

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dratax

Bio page: dratax
Joined: Mar 31, 2004
Last login: May 5, 2024
Total posts: 8,511 (19 FO)

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Messages

Author

Time

So billionaires get personal loans using their assets as collateral

Windward_Coug

10/28/21 10:28am

<< Deleted >>

spinner

10/28/21 10:29am

If i were a billionaire, I’m confident i wouldn’t really care how it’s done

Heath Squashwell

10/28/21 10:33am

All you need to do is take enough salary or sell stock to pay the loan

JOPE

10/28/21 10:33am

They don't take a salary if possible, just stock options. It avoids the SS taxes

Nat Gas Man

10/28/21 11:22am

not necessarily. If the asset continues to go up (like it has)

Cougforgood

10/28/21 10:34am

Yeah, but you push back the tax hit and only have to come up with interest and

stoils

10/28/21 10:35am

"Since loans aren't considered taxable income, the wealthy need only pay back th

SalmonOfCapistrano

10/28/21 10:35am

Right. So they are avoiding 25% tax with 4% interest. That’s the point.

cougsareforreal

10/28/21 10:40am

please do not conflate tax with interest rate. They are not the same thing.

SalmonOfCapistrano

10/28/21 10:42am

actually you know what? Let's go there.

SalmonOfCapistrano

10/28/21 10:46am

Open your mind a bit. Let’s say you want $100 million. You can sell stocks and

cougsareforreal

10/28/21 10:48am

Read my other reply. You're wrong.

SalmonOfCapistrano

10/28/21 10:50am

My boss does this. The interest on the loans he is getting are below 1% right now.

P-Boy Squad

10/28/21 10:54am

It seems you are missing the point, they will pay taxes eventually, BUT they are

BYUFootballisBack

10/28/21 10:52am

But they *will* pay taxes on it. And in fact MORE taxes.

SalmonOfCapistrano

10/28/21 10:53am

But by not having to pay the taxes now, they are essentially getting a tax-free

BYUFootballisBack

10/28/21 10:54am

and?

SalmonOfCapistrano

10/28/21 10:55am

And nothing, we were just arguing semantics, essentially

BYUFootballisBack

10/28/21 10:58am

You seem to think there's a problem somewhere. There are always a handful of

SalmonOfCapistrano

10/28/21 11:02am

No problem with it, it just seemed like you didn't understand at first, I see

BYUFootballisBack

10/28/21 11:05am

Too clarify, I thought you were under the impression that they weren't getting a

BYUFootballisBack

10/28/21 11:08am

This is incorrect man. They can wait until they pass away, get a step in basis on their assets, and have all that growth

RdF3

10/28/21 11:11am

This is right. 1% loans or less, secured with massive funds, done through trusts

Nat Gas Man

10/28/21 11:25am

this is a completely different problem with a different solution

SalmonOfCapistrano

10/28/21 11:56am

No one lives forever. I think many plan to run this play until they die.

joelvandyne

10/28/21 10:56am

If you think that you have a company that will grow by 100x selling stock now

novacoug1

10/28/21 10:36am

So don't sell my safemoon or Shiba? 🙂

paulb

10/28/21 10:46am

The they need to “pay their fair share” movement against those 4 individuals

cougfanz

10/28/21 10:37am

The people I know who are always set on paying stuff off & never having any "debt" don't have much money.

RdF3

10/28/21 10:38am

Depend on phase of life. Towards retirement less debt is better. Younger, be more aggressive.

Turnpike Lane

10/28/21 10:42am

They can let the debt run up forever and then have it paid for with assets that have stepped up in basis at their death.

RdF3

10/28/21 10:39am

This was EXACTLY my first thought. The "income" is never recognized

dratax

10/28/21 10:52am

Or even better

Cougrrrs Roll

10/28/21 1:30pm

lol at Elon’s response

letthewookieewin

10/28/21 10:39am

Why do people take out 80-90% loan to equity loans when many could put more

BYU71

10/28/21 10:40am

They pay interest on the loans, and pay it from their income earned. All large brokerage houses do these loans.

Turnpike Lane

10/28/21 10:41am

Another thing they do is have huge life insurance policies that cover the loans

Nat Gas Man

10/28/21 11:33am

It does work out

Cougrrrs Roll

10/28/21 10:44am

What you've described is the ideal retirement. A *lot* of normal people do this.

SalmonOfCapistrano

10/28/21 10:49am

Which assets do they make income off of?

BYU '80

10/28/21 10:59am

Obviously there are ways

Cougrrrs Roll

10/28/21 11:51am

So you were thinking housing specifically as the assets. Are there other example

BYU '80

10/28/21 1:05pm

There are lots of ways to create passive income where assets spin off cash. Some

Nat Gas Man

10/28/21 2:56pm

No, not at all

Cougrrrs Roll

10/28/21 6:09pm

14 days of rent won't provide much income.

dratax

10/28/21 3:33pm

Doesn't matter to me

Cougrrrs Roll

10/28/21 6:15pm

Clearly the person who wrote this doesn’t understand finance.

lilpenny

10/28/21 10:53am

I’m with the rich paying taxes. I’m just not willing to listen to people who pay

BYU '80

10/28/21 10:57am

Why the rich pay all the taxes

Cougrrrs Roll

10/28/21 11:57am

Eventually. But not now. Interest rates are insanely low - why pull money from growing stock? It's smart.

zonacougar

10/28/21 10:57am

Government could just make it illegal to pledge stock to obtain loans

Taccoug

10/28/21 11:31am

Not sure that would hold up. Same category as Real Estate loans. Nobody will

Nat Gas Man

10/28/21 11:34am

How is what the rich are doing any different than what the federal government is

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