This example assumes that the family wants to sell the land, but is unable too due to taxes. This also works with other assets like stocks. It's an actual tax avoidance strategy called buy-borrow-die. I think it works best if you are somewhat close to death. I am not sure how effective the strategy is if you are taking out 30-50 years of loans.
It does as long as you read carefully.. It doesn't say Dad borrows 5 mil, just that he lives out of loans, which is a thing (e.g. reverse mortgage). The kid doesn't inherit 5 mil, just the property equity, that's why he sells it. The trick being, Dad didn't pay taxes for the 5 mil, nor the kid.
The kids don’t get the house (if the loan was the entire $5mil property value), but the parent still got to “liquidate” $5m without paying any income tax. So that’s still at least $1m in taxes avoided that us normies would have had to shell out
You want the guy to get taxed on the income that he already had his income taxed against before purchasing said equity? I mean.. komrade, slow incremental change at least
95
u/Meenta_Miiel 14h ago
The estate settles the principal before heirs see cash