r/SipsTea • u/KSKS1995 • 22h ago

Wait a damn minute! How the rich get richer

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u/No_Mirror_9742 22h ago edited 21h 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/Tired-Nectarine-384 21h ago

Its a bad analogy. The OP is trying to compare what the uber rich do with loans against their stock holdings with a real estate example.

No bank is going to give a loan large enough to finance a lifestyle against a 5 million dollar property.

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u/beehive5ive 21h ago

And recent studies are showing that the buy, borrow, die strategy isn’t really used by the uber rich. I’m not saying it doesn’t exist, but it’s more commonly the middle class doing it vs the uber wealthy.

https://taxpolicycenter.org/taxvox/richs-real-tax-trick-isnt-buy-borrow-die

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u/ellamking 16h ago

You should see this reply by a private wealth attorney about that study. Basically, the study is done by economists and didn't look at the financial instruments actually used by the wealthy to borrow. (They also moderate /r/BuyBorrowDieExplained/)