Buy, Borrow, Die Calculator
See what you can safely borrow against your portfolio instead of selling it, how much tax that saves you this year, and what your heirs actually inherit once the loan is repaid.
Last reviewed September 2026 · How this calculator works
The "Buy, Borrow, Die" strategy is the three-step method wealthy investors use to spend from an appreciated portfolio without ever triggering a capital gains tax bill — and it's a lot more accessible than the billionaire headlines make it sound. This page explains exactly how it works, walks through a real worked example, and gives you a free calculator so you can run your own numbers before deciding whether it fits your situation.
What is the Buy, Borrow, Die strategy?
Buy, Borrow, Die describes three sequential moves: you buy assets that are likely to appreciate — stocks, index funds, or real estate, held in a normal taxable account. Instead of ever selling those assets to fund your spending, you borrow against them, using a margin loan, a securities-backed line of credit (SBLOC), or a home-equity line of credit. Loan proceeds aren't income, so there's no tax bill on the money you spend, and your original assets stay invested and keep compounding. When you eventually die, your heirs inherit those assets at a stepped-up cost basis under IRC Section 1014 — meaning, for tax purposes, the embedded gain built up over your lifetime is erased. The estate then typically sells a portion of the now-higher-basis assets to pay off the loan, often with little or no capital gains tax owed on that sale.
The name comes from law professor Edward McCaffery, who coined it to describe a completely legal sequencing of existing tax rules — not a loophole in the evasion sense. Every piece of it (capital gains rates, the fact that loans aren't taxable income, and the step-up in basis) is a standard, long-established part of the U.S. tax code.
Buy, Borrow, Die isn't just for billionaires
Most articles about this strategy use examples with $50 million portfolios, which makes it sound irrelevant to anyone without a private banker. In practice, the mechanics work the same way at a much smaller scale — anyone with a meaningfully appreciated taxable brokerage account or paid-down real estate can use it. The math changes, though: with a $500,000–$700,000 asset base rather than $50 million, your loan-to-value ratio moves a lot faster relative to your collateral, so the "borrow conservatively and monitor it every year" part of the strategy matters more, not less, the smaller your portfolio is. The calculator on this page defaults to a $500,000 stock portfolio and $200,000 of real estate equity specifically to show what the strategy looks like at a realistic upper-middle-class scale, not a hypothetical fortune.
A worked example: $700,000 in assets, borrowing $60,000 a year
Here's what the calculator's default scenario actually produces, so you can see the mechanics before you plug in your own numbers. Someone with $500,000 in stocks and $200,000 in real estate equity ($700,000 total), keeping loan-to-value at a conservative 30%, borrowing $60,000 a year at a 7.5% assumed rate, with the portfolio growing 8% annually:
- Conservative borrowing capacity in year one: $210,000 (30% of $700,000) — comfortably above the $60,000 annual draw
- Tax saved in year one alone by borrowing $60,000 instead of selling stock to raise it: $14,280, using a 23.8% combined long-term capital gains and NIIT rate
- Cumulative tax deferred over 25 years of borrowing $60,000/year rather than selling: roughly $357,000
- By year 25, the asset base has grown to about $4.79 million while the loan balance has grown to about $4.08 million — leaving roughly $715,000 in net equity for heirs, on top of the embedded gain of about $4.64 million that gets erased by the step-up in basis
Buy, Borrow, Die vs. selling stocks: which costs more in taxes?
The core trade-off is simple to see side by side. Say you need $60,000 to spend this year and you're in the top long-term capital gains bracket plus the 3.8% net investment income tax (23.8% combined):
| Approach | Tax owed this year | What happens to your position |
|---|---|---|
| Sell $60,000 of appreciated stock | Up to $14,280 | Shares are gone; that money stops compounding |
| Borrow $60,000 against the portfolio | $0 | Full position stays invested; a loan balance accrues interest instead |
Selling raises cash immediately and cleanly, with no ongoing interest cost or margin-call risk — it's simpler and sometimes the right call, especially for modest amounts or a short time horizon. Borrowing avoids the immediate tax and keeps your full position compounding, but it only comes out ahead if your assets grow faster than your borrowing rate over time, and it introduces real risk if the market drops while your loan-to-value is already high.
Your taxable assets
Assumptions
Your numbers
Asset value vs. loan balance over time
| Year | Asset value | Loan balance | Loan-to-value |
|---|
What happens at death
How to use this calculator step by step
- Enter your taxable assets. Only count assets you actually hold outside of retirement accounts — a brokerage account, individual stocks, or home equity. 401(k) and IRA balances don't qualify for either the borrowing side or the step-up in basis.
- Enter your cost basis. This is what you originally paid, including reinvested dividends. It doesn't change your borrowing capacity, but it drives how much embedded gain the step-up in basis would erase at death.
- Set a conservative loan-to-value. Lenders will often extend more, but the number you enter here is your personal risk ceiling — the calculator flags any year your projected loan-to-value climbs past it.
- Check the year-by-year table. Rows highlighted in red show where your loan-to-value has crossed the threshold you set. That's the signal to slow borrowing, pay down principal, or revisit your plan — not a hard stop, but a checkpoint.
Frequently asked questions
Is the Buy, Borrow, Die strategy legal?
Yes. It combines three separate, well-established parts of U.S. tax law: long-term capital gains rates, the fact that loan proceeds aren't taxable income, and the step-up in cost basis heirs receive under IRC Section 1014. It's a sequencing strategy, not a loophole in the evasion sense — though tax law can change, so it's worth checking current rules periodically.
What is the Buy, Borrow, Die strategy?
Buy appreciating assets in a taxable account. Instead of selling to fund spending — which triggers capital gains tax — borrow against them with a margin loan, a securities-backed line of credit, or a HELOC. At death, heirs inherit the assets at a stepped-up basis equal to fair market value, erasing the embedded gain, and the estate typically sells a slice to repay the loan with little or no capital gains tax.
How much can I safely borrow against my stocks?
Lenders often allow 50–70% loan-to-value on marginable stock, but borrowing near that maximum leaves little room for a market drop before a margin call. Most people using this strategy long-term keep loan-to-value well under 30–40% specifically to survive a downturn without being forced to sell.
Does this avoid capital gains tax completely?
It defers the tax during your lifetime and can eliminate it permanently for your heirs. While you're alive and borrowing instead of selling, you owe no capital gains tax on the money you spend. At death, the step-up in basis erases the built-up gain, so if the estate sells shortly after to repay the loan, there's little or no capital gains tax on that sale either.
What happens if the market drops after I borrow?
If your collateral value falls enough that loan-to-value rises past your lender's maintenance threshold, you'll get a margin call — deposit more collateral or cash, or the lender sells assets for you. A forced sale during a downturn is exactly the risk this strategy is meant to avoid, which is why a conservative loan-to-value matters more than the tax savings themselves.
Does the Buy, Borrow, Die strategy work with a smaller portfolio, like $500,000?
It can, though the arithmetic gets tighter than it does for the ultra-wealthy. With roughly $500,000–$700,000 in appreciated assets, a conservative 30% loan-to-value limit still supports meaningful annual borrowing, but the loan balance compounds faster relative to the asset base than it would for a much larger portfolio. Track loan-to-value every year, not just at the start — a fixed dollar draw becomes a larger share of a smaller base as the loan compounds.
What assets can I use for the Buy, Borrow, Die strategy?
The most common collateral is a taxable brokerage account of marginable stocks, mutual funds, or ETFs, borrowed against with a margin loan or a securities-backed line of credit (SBLOC). Real estate equity works too, typically through a HELOC or cash-out refinance. Retirement accounts like a 401(k) or IRA don't qualify — they're already tax-deferred and don't receive a step-up in basis the same way.
Related guides
- Buy, Borrow, Die Explained: How the Strategy Works and Where It Breaks
- Securities-Backed Lines of Credit: How They Work and the Risks to Know
- Step-Up in Basis Explained: What Heirs Inherit and Why It Matters