Buy, Borrow, Die

You've probably heard that billionaires almost never sell their stock, yet somehow fund lavish lifestyles without a massive tax bill. It sounds like a myth or a loophole reserved for the ultra-wealthy — but it's a real, well-documented strategy called "Buy, Borrow, Die." And while it's most associated with billionaires avoiding capital gains taxes, the mechanics behind it — specifically a tool called a securities-based line of credit (SBLOC) — are available to a lot more people than you'd think. Let's break down how it actually works, and where it can go wrong.

The three steps, in plain terms.

1. Buy — You invest in appreciating assets: stocks, a diversified portfolio, real estate.
2. Borrow — Instead of selling those assets to access cash, you borrow against them. The asset keeps growing, and because a loan isn't income, you owe no capital gains tax on the borrowed money.
3. Die — At death, your heirs inherit the assets at their current market value — not what you originally paid. This is called a step-up in basis, and it effectively erases the unrealized capital gains that built up during your lifetime. The loan gets paid off (often by the estate or by selling some assets at the new, stepped-up basis), and the rest passes to your heirs with little to no capital gains tax ever having been paid on the growth.

The appeal is obvious: you get to spend your wealth during your lifetime without triggering the tax bill that selling would create.

How the "borrow" step actually works: securities-based lines of credit (SBLOCs).

An SBLOC is a revolving line of credit secured by the value of the securities in your brokerage account — stocks, bonds, mutual funds, ETFs. It functions a lot like a HELOC, except your investment portfolio is the collateral instead of your house.

A few key mechanics worth understanding:

• You're not selling anything. Your portfolio stays invested and keeps compounding, even while you're borrowing against it.
• Rates are typically much lower than unsecured credit. Because the loan is backed by liquid collateral, SBLOC rates currently run roughly 5.8% to 7.8% for most borrowers — generally priced as SOFR (a floating benchmark rate) plus a spread of about 1.9 to 3.1 percentage points.
• Access is fast, with minimal underwriting. Many lenders don't require a credit check or income verification — the collateral does the work.
• There's usually a minimum portfolio size. Most lenders require somewhere between $100,000 and $250,000 in eligible securities to open a line.
• The money can't be used to buy more securities. This is an important, often-overlooked rule. SBLOC proceeds are "non-purpose" funds — they can be used for almost anything (a home purchase, a business investment, covering living expenses, paying taxes) except buying more securities or paying down margin debt. That's a key difference from a margin loan, which is specifically intended for that purpose and typically carries higher rates (8-13%).

Why this matters for the "Die" part of the strategy.

This only works because of two pieces of tax law working together. First, borrowed money has never been taxable income — a loan isn't a sale, so there's no capital gains event. Second, the step-up in basis at death means your heirs' cost basis resets to the value on your date of death, not what you originally paid. Combine the two, and a family can potentially pass down significant investment growth without that growth ever being taxed at the capital gains level — only the loan balance needs to be settled, typically by the estate.

Worth noting: the current federal estate and gift tax exemption is historically high and has been made permanent under recent tax law, which means this strategy isn't just theoretical for the ultra-wealthy — it's genuinely usable for a much broader range of business owners and investors than it used to be.

Now, the real risks — because this isn't a free lunch.

This is where I want to slow down, because the parts of this strategy that get the most attention online (lower taxes, forever liquidity) tend to crowd out the real risks that come with it.

• Maintenance calls. If your portfolio's value drops significantly, the lender can issue a maintenance call, requiring you to either deposit more collateral or repay part of the loan immediately. If you can't do either, the lender has the right to sell your securities to cover the shortfall — potentially at the worst possible time, and potentially triggering the very capital gains tax bill you were trying to avoid in the first place.
• Floating rates. SBLOC rates move with SOFR. A line that looked cheap when you opened it can get meaningfully more expensive if rates rise while you're carrying a balance.
• Concentration and sequencing risk. Borrowing against a portfolio that then drops in value, right when you also need liquidity, is exactly the scenario that turns a smart tax strategy into a forced, poorly timed sale.
• It's easy to over-borrow. Because access is so frictionless — no credit check, fast approval — there's a real psychological risk of treating a line of credit like free money rather than genuine leverage against your life's savings.

The bottom line.

Buy, Borrow, Die is a legitimate, well-established strategy — not a loophole or a gimmick — and the tool behind it, the SBLOC, is genuinely more accessible than most people realize. But it's also leverage against your real, hard-earned portfolio, and leverage cuts both ways. The people who use this well treat the borrowing side conservatively — leaving real cushion below the maintenance threshold — and build it into a broader plan, rather than maximizing the loan simply because the lender will let them.

If you're sitting on a concentrated or highly appreciated portfolio and want to know whether this strategy fits your actual numbers, click Book A Meeting.

FAQ: Buy, Borrow, Die as a tax strategy

1. What does “Buy, Borrow, Die” mean?

It’s a strategy for funding your lifestyle without selling appreciated investments. You buy assets that grow, such as stocks, a diversified portfolio, or real estate. You then borrow against them instead of selling, and you hold them until death, when your heirs receive them at a stepped-up cost basis. It’s a real, well-documented strategy, not a loophole or a gimmick.

2. What is a securities-based line of credit (SBLOC)?

An SBLOC is a revolving line of credit secured by the securities in your brokerage account, including stocks, bonds, mutual funds, and ETFs. It works much like a home equity line of credit (HELOC), except your investment portfolio is the collateral instead of your house. Your portfolio stays invested and keeps compounding while you borrow against it.

3. Why doesn’t borrowing against my portfolio trigger capital gains tax?

A loan isn’t a sale, and borrowed money isn’t taxable income, so no capital gains event occurs. Your investments keep growing, and you don’t owe tax on the cash you borrow. The tax is deferred, not eliminated, and the strategy depends on the step-up in basis described in the next question.

4. What is a step-up in basis, and why does it matter?

At death, your heirs’ cost basis resets to the asset’s market value on the date of death, not what you originally paid. That erases the unrealized capital gains that built up during your lifetime. The loan is typically settled by the estate, often by selling some assets at the new, higher basis, and the rest passes to heirs with little or no capital gains tax on the growth. The federal estate and gift tax exemption is historically high and has been made permanent under recent tax law, which makes the strategy usable by a broader range of business owners and investors.

5. How much does an SBLOC cost?

As of the post’s October 2026 publication, rates run roughly 5.8% to 7.8% for most borrowers. They’re typically priced as SOFR, a floating benchmark rate, plus a spread of about 1.9 to 3.1 percentage points. Because the loan is backed by liquid collateral, that’s generally much lower than unsecured credit and often lower than a margin loan, which typically runs 8% to 13%. Because the rate floats with SOFR, a line that looks cheap today can become more expensive if rates rise while you carry a balance.

6. How much do I need to qualify, and what can I use the money for?

Most lenders require roughly $100,000 to $250,000 in eligible securities to open a line. Many don’t require a credit check or income verification, because the collateral does the work. SBLOC proceeds can be used for almost anything, including a home purchase, a business investment, living expenses, or paying taxes. The exception is that you can’t use the money to buy more securities or pay down margin debt.

7. What is a maintenance call, and why is it the biggest risk?

If your portfolio’s value drops significantly, the lender can require you to deposit more collateral or repay part of the loan immediately. If you can’t, the lender can sell your securities to cover the shortfall, potentially at the worst possible time. That forced sale can also trigger the very capital gains tax you were trying to avoid. The risk is worst when the portfolio falls at the same moment you need cash.

8. Is Buy, Borrow, Die right for me?

It can fit someone with a concentrated or highly appreciated portfolio, but it’s leverage against your real savings, and leverage cuts both ways. Because access is fast and frictionless, it’s easy to over-borrow and treat a line of credit as free money. People who use it well borrow conservatively, leave a real cushion below the maintenance threshold, and build it into a broader plan. A fiduciary flat-fee advisor can run the numbers against your actual portfolio and goals before you open a line.