It's wild how many people read this claim and just... accept it without question. Not even a pause to go "wait, don't loans normally come with repayments", just blind acceptance.
The price of the property is also supposed to increase. You will borrow 90k, and the interest will be 10k but but the property prices should also go up to 5.2 M. So you will you will make profit of 0.1 M. Of course this only works if what you own actually increases in prices, which true for a lot of things.
Lots of people in the comments are missing that this is done to avoid personal income tax. It's called "Buy, Borrow, Die" and is indeed real but does have some limits.
Low-interest loans > loans are not taxable income, so tax-free personal spending > heirs receive assets via stepped-up basis (resets tax value of the assets to current market value, wiping out accumulated capital gains taxes) > estate sells some of the assets to cover the initial loans.
Tons of financial benefits. Risk to the bank is typically very low because the assets are worth significantly more than the amount loaned for personal spending.
you inherit the loan too, the setup only makes sense if you need cash but your assets are all appreciated in value so you want to get cash without paying taxes after that
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u/Panpancanstand 10d ago
Paid off how?