The ultra-rich don’t play by society’s rules.
Instead, they use a tax strategy known as “BUY, BORROW, DIE” to build generational wealth.
It’s time to expose their dirty little secret:
Instead, they use a tax strategy known as “BUY, BORROW, DIE” to build generational wealth.
It’s time to expose their dirty little secret:
Step 1: BUY
The rich understand that trading time for money doesn’t build wealth.
So what do they do?
They use their income to buy assets that produce cash flow.
Specifically, real estate.
Because the US government LOVES real estate investors…. as you’ll see:
The rich understand that trading time for money doesn’t build wealth.
So what do they do?
They use their income to buy assets that produce cash flow.
Specifically, real estate.
Because the US government LOVES real estate investors…. as you’ll see:
Step 2: BORROW
Once the property’s value has increased, they borrow against the higher value.
In other words:
They take out a bigger mortgage,
pay off the original mortgage,
& pocket the difference.
Oh, and they pay no tax because debt is non-taxable.
Once the property’s value has increased, they borrow against the higher value.
In other words:
They take out a bigger mortgage,
pay off the original mortgage,
& pocket the difference.
Oh, and they pay no tax because debt is non-taxable.
Here’s a 5-step example:
1. Let's say you purchase a $500K property with a $400k mortgage and $100k out of pocket.
2. Wait 5 years. The property is now worth $600K (4% increase per year).
3. Refinance at the new value:
80% mortgage = $480K loan.
1. Let's say you purchase a $500K property with a $400k mortgage and $100k out of pocket.
2. Wait 5 years. The property is now worth $600K (4% increase per year).
3. Refinance at the new value:
80% mortgage = $480K loan.
4. Pay off the original mortgage (now only $380K).
5. Pocket the $100K difference and pay NO TAX on it.
In just 5 years, you recovered 100% of the cash you originally put in.
They call that an *Infinite ROI*
But there's more.
5. Pocket the $100K difference and pay NO TAX on it.
In just 5 years, you recovered 100% of the cash you originally put in.
They call that an *Infinite ROI*
But there's more.
You still own the home.
So every year you will continue to collect cash flow, which you can shelter using depreciation.
• No taxes
• Passive income
• 100% of your cash returned
Sounds pretty good.
But that’s just the beginning.
It gets better 👇
So every year you will continue to collect cash flow, which you can shelter using depreciation.
• No taxes
• Passive income
• 100% of your cash returned
Sounds pretty good.
But that’s just the beginning.
It gets better 👇
Step 3: DIE
When you pass away, your heirs will inherit the property and the *Basis* resets
*Basis* sounds complicated,
But it’s not:
It’s just what you paid for the property, less the depreciation you took while you owned it.
When you pass away, your heirs will inherit the property and the *Basis* resets
*Basis* sounds complicated,
But it’s not:
It’s just what you paid for the property, less the depreciation you took while you owned it.
Back to our example:
You originally paid $500K for the property and probably depreciated $300K of that during the 20 years you owned it.
So your Basis = $200K.
But 20 yrs later, that property is now worth $1 Million.
You originally paid $500K for the property and probably depreciated $300K of that during the 20 years you owned it.
So your Basis = $200K.
But 20 yrs later, that property is now worth $1 Million.
Here's what should have happened if you sold before you died:
$1M Sale Price (-) $200K Basis
= $800K Capital Gain
(x) 20% Tax Rate
= $160K of Tax
* But when your kids inherit the property their Basis resets to the Fair Market Value *
In this case, $1 Million.
🤯
$1M Sale Price (-) $200K Basis
= $800K Capital Gain
(x) 20% Tax Rate
= $160K of Tax
* But when your kids inherit the property their Basis resets to the Fair Market Value *
In this case, $1 Million.
🤯
So what do you think they do?
They sell the property for $1 Million.
Their Basis is also $1 Million.
So there is NO capital gain.
Therefore NO tax is due.
They sell the property for $1 Million.
Their Basis is also $1 Million.
So there is NO capital gain.
Therefore NO tax is due.
Then they take that $1 Million of cash and buy $5 Million of new real estate using debt.
This process repeats Over and Over,
Generation after Generation.
♻️
This process repeats Over and Over,
Generation after Generation.
♻️
And this, my friends, is how the ultra-rich build ridiculous wealth and hold onto it forever.
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