From 24/7 Wall St. · David Beren · · 1m 20s
At 78 He'll Need $150,000 Without Tax
An 78-year-old can borrow against stocks held since the 1990s to access $150,000 tax-free until death.
In brief
An 78-year-old can borrow against stocks held since the 1990s to access $150,000 tax-free until death. An 78-year-old can borrow against stocks held since the 1990s to access $150,000 tax-free until death. Originally reported by 24/7 Wall St..
Tax-Free Strategy for Wealthy
An 78-year-old needs $150,000 but selling stocks held since the 1990s triggers a tax bill.
Borrowing Avoids Tax Bill
Borrowing against the brokerage account raises the same cash without taxable income.
Tax Rule 1: Loan Not Taxable
Borrowed money isn’t taxable income because a loan creates a legal obligation to repay it.
Tax Rule 2: Estate Basis
Property included in your estate takes a basis equal to its value on the date of death.
Example: $150,000 Sale
A married couple with $260,000 income would owe $30,549 in federal tax selling $180,549 of stock.
Loan Interest Costs
Loan interest runs until death, costing $1,500 per year for each percentage point on the loan.
Market Drop Risk
A market drop can force the sale of pledged shares at low prices, triggering tax bills.
Who Benefits Most
The strategy fits someone with a large embedded gain, diversified portfolio, and short expected horizon.
What Happens Next
If the market falls sharply, the borrower may have to sell shares at low prices and pay tax.
The essence
An 78-year-old can borrow against stocks held since the 1990s to access $150,000 tax-free until death.
