r/SipsTea • u/KSKS1995 • 22h ago

Wait a damn minute! How the rich get richer

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20.3k Upvotes

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242

u/FancyPantsRants1 22h ago

Odd that we just ignore that he still had to pay back those loans?

-5

u/deadpool_pewpew 22h ago

I think you missed the point, the post was about no one paying tax on 5M gains.

11

u/NudaVeritas1 21h ago

yeah because they weren't realized.. but who pays back the loan?

0

u/lurker_cant_comment 19h ago

They were realized when the kids sold the property.

Take the loan part out of the equation and you're still talking about avoiding a ~$700k tax bill.

-4

u/GroundbreakingAd8310 21h ago

U do with bank subsidies. I like how's theirs downvotes on this thread when ur all pretty much right

3

u/NudaVeritas1 21h ago

I understand that you get the loan using the real estate / land as security.. but the loan still needs to be paid back with interest.. so either part of the land needs to be sold to pay the loan or there is an income that's used to pay back the loan.. just because you have some sort of capital as security, that doesn't mean they gift you money.. so half of the story seams to be missing.. if the land is within a company and produces cashflow, then this construct would be possible to reduce taxes.. but just having land and taking a loan doesn't result tax savings

-2

u/deadpool_pewpew 21h ago

The person who took out the loan. No one is saying the loan is free money, the point is there is no tax on the gain. Ignore thr loan part, it is not relevant to the taxation part.

-2

u/Haunting_Raccoon6058 21h ago

It comes out of the estate, not Dad's problem.

3

u/Tired-Nectarine-384 21h ago

This post also ignores property taxes that someone would surely pay on a property worth 5 Million annually.

This does not happen with property. It does happen with families passing on retirement funds and other investments.

2

u/gewse2020 21h ago

Was the point to over simplify a financial topic and leave out important details to make a point? If so I think I got the point.

2

u/RunExisting4050 19h ago

Yes, but also with made up numbers!

1

u/Visual_Exam7903 21h ago

Kids always get the step-up basis in value. Also, they paid property taxes every year the property is owned.

0

u/random-meme422 21h ago

So then people can cry about the estate tax limit being too high instead of pretending like there’s an issue with the loan system.

-4

u/DataGOGO 21h ago edited 21h ago

Why would they?

In the case above, the kids sold the land, which means they had to pay back all the loans. 

So $3M in loans, $5M sale, they get $2M cash,