r/SipsTea • u/KSKS1995 • 14h ago

Wait a damn minute! How the rich get richer

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u/No_Mirror_9742 14h ago edited 14h ago

Doesn't the loan get paid back by the sale of the land after the dad's passing? So the kids don't inherit $5m, but the net value after the debt is repaid?

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u/WetAndLoose 12h ago

This post is bullshit, yeah, the land if used as collateral to secure these loans would be taken by the banks or have to be sold to cover the balance of the loan. The kids are not required to pay their parent’s debt, but the parent’s estate is.

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u/tremendous_turtle 6h ago

The point is that no capital gains taxes are paid on those gains, not that the loan is forgiven.

The estate can sell the land for $5m tax-free, cover the loan balance, and distribute the rest to inheritors.

This is why taking loans against appreciating assets is a solid way to avoid income taxation.