Buy, Borrow, Die Calculator

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.

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.

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.

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.

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.