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points by didgetmaster 1 day ago | 0 comments

Property taxes are not wealth taxes. Two houses side-by-side with the same value, should have the same property tax assessed. One is owned outright. The other is mortgaged to the hilt and its 'owner' has very little wealth from it.

[–] jayd16 1 day ago

I wonder if we should pass a law where borrowing against an asset is a taxable event.

At least it closes the loop hole where you borrow against your stock and never pay taxes on it because you never sold it.

[–] what 1 day ago

I don’t understand this “loop hole”, who is giving loans that don’t have to be repaid? Surely the collateral will be sold eventually to repay the loan and service the interest?

[–] aidenn0 1 day ago

If you are a good customer of the bank and the LTV of the collateral is very low, then you will get a very low interest rate. If the collateral pays dividends (which are also taxed at a lower rate than ordinary income), then the dividends can service the interest. Meanwhile capital gains keep accumulating tax-free.

[–] HDThoreaun 1 day ago

With post covid interest rates this strategy very rarely makes sense. Even people like zuck getting fully collateralized loans against their stock will still have to pay close to 5%. There are certainly circumstances where it makes sense to take a 5% loan, but they are few. It does not make sense to just roll loans over forever anymore. Thats why all the big tech stocks pay dividends now. Founders dont want to sell and they dont want to take loans.

Buy borrow die also leads to massive estate taxes which is why billionaires use trusts instead. Buy borrow die is best for people with around $50 mil in assets because they dont have any estate tax.

[–] quickthrowman 1 day ago

Refinance the loan with another loan or just use a revolving credit account with no fixed term.

If your stock holdings are growing faster than inflation and the interest rate at which you are borrowing, it’s an easy way to monetize unrealized gains without a taxable event. If you have a huge stock portfolio, brokers will lend you money against your stock at very low rates, a few bps above what Treasuries yield. If you have $4B of stock they might let you borrow $1B for what would be ~4-4.5% using that stock as collateral. You can theoretically take out a margin loan for up to 100% of the stock held in an account, but that’s risky due to margin calls.

The idea is to let the cost basis step up to the price of the asset at your death which will eliminate the capital gains that would’ve been owed. Then your heirs sell a portion of the stock to pay off the loan and keep the rest.

[–] tekla 1 day ago

You know, every time this is brought up, a small part of me dies.

People bring up a loophole that does exist, and assume that everyone uses it. Welp, like most of these "1%" discourse, its pretty damn rare.

https://taxprofblog.aals.org/2026/06/16/fox-and-liscow-the-r...

> If buy-borrow-die were the dominant playbook, the rich would be leveraging aggressively against their ballooning portfolios. They aren’t. Borrowing against unrealized gains is, if anything, more of a middle-class habit than a billionaire one.

[–] aidenn0 1 day ago

Here's a different quote from the same article:

> Buy-borrow-die is a real loophole, and in absolute terms the rich borrow a lot...

[–] jayd16 1 day ago

What about a trillionaire habit?

[–] logankeenan 1 day ago

Can you elaborate more on why you don’t think a property tax is not a wealth tax? My understanding is that a wealth tax is a tax on the value of an asset. The asset could be a variety things that have net worth

Also, not all states apply property taxes the same. In my state, my house is assessed often by the government and then my taxes rise based on the value of my house.

[–] aidenn0 1 day ago

A wealth tax is a tax on your net wealth.

Property tax is a tax on specific property (usually we are talking about real property, but I've paid e.g. property tax on a car). It is usually irrespective of wealth.

Someone who buys a house with cash and their neighbor who is underwater on their mortgage and at risk of insolvency will pay the same tax.

Note also that you rarely see property taxes on e.g. valuable jewelry because unlike real property and cars, both of which have ownership centrally registered, jewelry is not centrally registered.

[–] logankeenan 1 day ago

If I understand you correctly, you’re saying the distinction on the “wealth” is specific to if the person owns the whole property. If they fully own the property then it could be considered a wealth tax. However, many people don’t since they have a mortgage so it’s not taxing them in their net wealth.

[–] aidenn0 1 day ago

Right, that's one major difference.

Another major difference is that houses are both harder to hide and easier to value than many other forms of wealth.