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Spoiler: the same way you can access your home equity without selling your house.
With just a "slight" difference in that you do not have pay taxes on the gains you made on your house (what you paid vs. what it is worth now) when you sell it and you are paying HEFTY property taxes on your current home worth each and every year. Very poor analogy...
Spoiler: the same way you can access your home equity without selling your house.
The fact that we can tax houses, the main form of wealth for most people, proves that wealth taxes (levied on other forms of wealth) would be just fine.
All you can do is economize on how much home you use, and where it is (where fewer people want to be), which we have seen happen over the past 2-3 decades. So I think we are feeling the pressure of this wealth tax, along with inflation, global competition, and other factors in the real estate market.
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I disagree the framing is deceptive. A big reason this is done is to avoid paying taxes altogether - borrow against your equity, and then when you die your heirs receive a step-up in basis, so the gains are never taxed. To make it worth while you need to have a crap ton of money, such that the interest on your loans is less than the estate taxes you'd pay. Only very, very rich people pay any estate taxes in the first…
> avoid paying taxes altogether At some stage in wealth, perhaps, and not avoid but postpone. More important probably are cases where actually selling the shares means giving up control over a business, or having to settle things with the rest of the family whose "destiny" it is to hold these shares in common.
https://www.reddit.com/r/BuyBorrowDieExplained/comments/1f26...
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> My gains are realized each year via property tax assessments This strongly depends on jurisdiction. In many (today I learned, not all) assessed value is explicitly different from market value.
The fact is though if you live in America are paying property taxes on your home, you are NOT hiding from the IRS the fact that you do - you are not saying "sorry, I don't really own this home and I won't be paying anything to you until such later time when my ownership will be revealed at the grand sale at which point I'll pay some taxes" With "unrealized" stock gains you are doing just that - hiding ownership so yo…
There was a story from days of the first dotcom boom when Larry Ellison got a call from his banker complaining that he was overdrawn on his personal account by a billion dollars.
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It’s called the stepped up basis and yes, only applies to your estate. A married couple who bought a house in Palo Alto for $250k that’s now worth $5.25M and who bought $250k of Apple stock that’s now worth $20.25M would have a Federal tax bill of ~$5 million if they sold those assets and gave the cash to their kids. If however they were hit by a bus on the way to their accountants office, and the kids inherited the…
This is because for a long time, the USA does not tax assets other than real estate. Our tax system is structured around the fundamental idea of taxation occuring on transactions, whether that's income in exchange for labor, income resulting from the sale on (non-real-property) assets etc. I'm not sure if this is a good thing (it might be, it might not) but it's the way it is.
How is this different in principle from software developers using the RSUs in their brokerage accounts to get a loan for a vacation home or a boat? BTW the step-up in basis applies for when regular people die.
So, uh… it’s not different, no
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You are very convincing and have swayed my opinion on this issue for sure. I do not agree with a lot of it but good disagreements :) > How? There is nothing different from the Amex example... In both cases I'm showing assets held elsewhere as proof that I'm rich. but you are saying to Uncle Sam that you are not rich... so you are just a big fat liar here and your punishment should be cap gains taxation!!!! > In the e…
> you are saying to Uncle Sam that you are not rich No I'm not. I'm reporting all of those assets as held. They've gained in value, and if and when I sell them I'll pay tax on those gains. In the meantime, they're just sitting there. Appreciating unrealized. And making me look rich to potential lenders. > exactly what needs to be stopped except of course it won't be cause you know No, I don't. I see an analogy with t…
Heh.
How is this different in principle from software developers using the RSUs in their brokerage accounts to get a loan for a vacation home or a boat? BTW the step-up in basis applies for when regular people die.
If you’re talking about someone with enough RSUs to collateralize a home loan, you’re almost certainly talking about someone in the top 1% of wealth in the US So, uh… it’s not different, no