Buy, borrow, die is a wealth strategy in which appreciated assets are never sold — they are held, borrowed against to fund spending, and passed at death, where the step-up in basis erases the accumulated capital gain permanently.
In plain terms
The US taxes capital gains only when an asset is sold. So don’t sell. Buy assets that appreciate, borrow against them when you need cash to live on, and let your heirs inherit them, at which point the basis resets and the lifetime gain is never taxed by anyone. The phrase is shorthand, popularized by law professor Edward McCaffery, for a sequence that each individually is unremarkable and that together produces an outcome many people find hard to accept.
How it works
Buy. Acquire assets that compound without throwing off taxable income — founder stock, real estate, index funds. Unrealized appreciation is not income and is not taxed.
Borrow. Fund living expenses with debt secured by the portfolio: an SBLOC, a pledged asset line, or a mortgage against real estate. Loan proceeds are not income, so no tax is due. The interest is a real cost, but it is far below the capital gains rate on an equivalent sale.
Die. At death the basis steps up to market value. The estate repays the loans, often from a portion of the now-untaxed assets, and the heirs receive the remainder with a fresh basis. The income tax on a lifetime of appreciation is never collected.
The numbers
- Tax on borrowing: zero. Loan proceeds are not income.
- Cost of borrowing (2026): roughly 5.8%–8% on a securities-based line, versus a 23.8% federal rate — plus state tax — on the gain from selling the equivalent amount.
- Basis reset at death: to full market value, for assets included in the estate.
- Estate tax exemption (2026): $15 million per person, $30 million per couple; 40% top rate above it.
- Where the strategy breaks even: when interest compounds faster than the assets appreciate. At a 7% borrowing cost, an asset growing at 5% is losing the race, and the loan balance eventually forces a sale anyway.
What people get wrong
That it is free money. Three things constrain it. First, the interest is real and compounds — the strategy quietly assumes an asset that appreciates faster than the loan accrues, which is not guaranteed and is exactly what fails in a long drawdown. Second, the collateral can be called: a market fall triggers a maintenance call, and a forced sale at the bottom realizes the gain the whole structure existed to avoid. Third, above the exemption the estate tax is 40%, so at the very top the tax is deferred and reshaped rather than eliminated.
The other common error is scale. The strategy needs an asset base large enough that living expenses are a small fraction of it. A household with a $2 million portfolio spending $150,000 a year cannot borrow its way through a thirty-year retirement. One with a $2 billion position spending $10 million a year comfortably can. This is a strategy that works in proportion to how little you need relative to what you have.
Related
Read more: Borrowing Against Wealth: Why the Rich Often Use Debt · Taxes: How Wealth Is Structured and Preserved · Inheritance: The Transfer of Wealth Between Generations
See also: SBLOC · Step-up in basis · Estate tax exemption