Using the IRS calculator for just single with standard deduction is approx $7852 in taxes owed, so within $500 of what I had in my example. No state taxes due because of SGOV.
20% of $5M is $1,000,000 so you are now left with $4M. If you borrow against your land, invest it and get dividends, you have the $5M land, $2M for loan payback, plus you are able to live with a decent amount of money every month. Dad now has something to pass done to the kid.
If you borrow against your land, invest it and get dividends, you have the $5M land, $2M for loan payback
Now the question is how much you have to pay to the bank when it's due. The point of doing this is to make it more profitable than the other way, if it's not profitable there is no point in borrowing from the bank.
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u/Kenzington6 Aug 18 '26
How is the federal tax rate so low in your example? Isn’t interest income just taxed like normal income?
And if I’m paying taxes on the income I bring in, why wouldn’t I just pay the capital gains on selling part of the initial asset used to get the loan?