"Buy, Borrow, Die" is a wealth strategy long associated with the ultra-rich, and it's increasingly discussed for ordinary investors with appreciated assets. The idea is simple. Instead of selling investments, and paying capital gains tax, to fund your life, you borrow against them. At death, your heirs may inherit the assets with the built-up gain wiped out for tax purposes. Here's how each step works, and where it can go wrong.
Step 1: Buy
You buy assets that are likely to appreciate over time, such as stocks, index funds or real estate, and you hold them. As long as you don't sell, the growth isn't taxed. An asset bought for $150,000 that's now worth $700,000 has a $550,000 unrealized gain, and no tax is due on it until you sell.
Step 2: Borrow
When you need cash, instead of selling, you borrow against your assets. Common tools include:
- Securities-backed lines of credit (SBLOCs) from brokerages, secured by your investment portfolio
- Mortgages, home equity loans or cash-out refinances on real estate
- Portfolio margin loans, which are generally riskier and more restrictive
Loan proceeds aren't income, so they aren't taxed. You pay interest instead of capital gains tax. The strategy works best when your assets grow faster than your loan balance does.
Step 3: Die (the step-up in basis)
This is the step that makes the strategy work. Under federal tax law, when someone inherits an asset, their cost basis is generally "stepped up" to the asset's fair market value on the date of death. The unrealized gain built up during the owner's lifetime is never taxed as a capital gain. Heirs can then sell assets to repay the loans. We explain the details in our step-up in basis guide.
Estate tax is a separate question. For 2026, the federal estate tax exemption is $15 million per person, made permanent and indexed for inflation by 2025 legislation, so most estates owe no federal estate tax. About a dozen states plus D.C. have their own estate taxes with lower thresholds, though.
A worked example
Suppose you have a $1,000,000 portfolio, borrow $40,000 a year at 7% interest, and the portfolio grows 7% a year. You never repay the loan during your lifetime.
| After 15 years | Amount |
|---|---|
| Portfolio value | $2,759,032 |
| Loan balance (draws + compounded interest) | $1,005,161 |
| Loan-to-value | 36.4% |
On paper, that works: $600,000 borrowed, $1.75 million of net value remaining, and no capital gains tax paid. But look at what happens if the market drops 35% in year 15. The portfolio falls to about $1.79 million, and the loan-to-value jumps to 56%. That may be above what a lender allows, which triggers a maintenance call at the worst possible moment.
Where the strategy breaks
- Market crashes. A sharp decline can force you to add cash or have your investments sold at low prices. That realizes the very gains you were avoiding, and it locks in losses. See our SBLOC risk guide.
- Interest rates. Most SBLOCs have variable rates tied to benchmarks like SOFR or prime. If rates rise, the loan compounds faster than your assets grow.
- Living too long. The loan keeps growing for as long as you keep borrowing. The longer the horizon, the more the math depends on steady growth.
- Tax law changes. The step-up in basis has been the subject of repeal proposals in the past. The strategy depends on current law continuing.
- Heirs inherit the debt. The loans must be repaid from the estate, and heirs receive what's left.
Who it can make sense for
The strategy tends to fit people with large, highly appreciated, diversified holdings; conservative borrowing, well below the lender's maximum; enough other income to service interest if needed; and a long-term plan to leave assets to heirs. It's rarely a good fit for someone who would need to borrow near their limit, holds a concentrated position, or has no cushion to meet a maintenance call.
Try your own numbers
Our Buy, Borrow, Die calculator projects your asset value, loan balance and loan-to-value year by year, and flags years where you'd exceed your borrowing limit. Test it with a lower growth rate and a higher interest rate than you expect. If the plan only works in the optimistic case, it's fragile.
Frequently asked questions
Is Buy, Borrow, Die legal?
Yes. Borrowing against assets and the step-up in basis are both features of current tax law. The risks are financial, not legal.
Can I use a securities-backed line of credit to buy more stock?
Generally no. SBLOCs are typically "non-purpose" loans that can't be used to buy or carry securities.
Do I need a lot of money for this?
Many brokerages require a minimum portfolio, often around $100,000, to open an SBLOC. The strategy is most robust when you borrow only a small fraction of your assets.