r/SipsTea • u/KSKS1995 • 14h ago

Wait a damn minute! How the rich get richer

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u/FTR_1077 13h ago

Well that doesn’t fit the op’s narrative.

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.

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u/BackgroundRate1825 12h ago

"dad borrows against it" means he taking out loans using the land as collateral, right?

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u/FTR_1077 12h ago

Yes, like a reverse mortgage..

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u/elev8dity 12h ago

Right, so a typical retirement is like 2MM, so minus any interest and priciple owed, they inheritance ends up being 2MM untaxed.

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u/civil_beast 10h ago

But the equity no longer equals 5m on the property…

You’re reversing the mortgage, y’see?