Buy Borrow Die Calculator
Estimate how a buy-borrow-die strategy can preserve liquidity, defer capital gains taxes, and change estate outcomes. This calculator models long-term appreciation, borrowing capacity, simple loan growth, and a comparison between selling appreciated assets versus borrowing against them.
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Results
Enter your assumptions and click Calculate Strategy to see your projected comparison.
What a Buy Borrow Die Calculator Actually Measures
The term buy, borrow, die describes a wealth strategy often discussed in relation to highly appreciated assets such as concentrated stock positions, broad investment portfolios, commercial real estate, family businesses, or other long-held capital assets. The idea is straightforward: first, you buy and hold appreciating assets for a long time. Second, instead of selling those assets and realizing taxable gains, you borrow against them to create liquidity. Third, when the owner dies, heirs may receive a step-up in basis under current U.S. tax rules, potentially reducing or eliminating income tax on unrealized appreciation accumulated during life.
A buy borrow die calculator is designed to test whether that strategy appears economically favorable under a specific set of assumptions. It does not predict the future, and it does not provide legal or tax advice. What it does is estimate the relationships among asset growth, borrowing capacity, taxes avoided by not selling, accumulated loan costs, and eventual net estate value. In other words, it helps translate a sophisticated planning concept into numbers you can compare side by side.
This calculator focuses on the most practical modeling questions:
- How much could the asset be worth in the future if it keeps appreciating?
- How much liquidity might a lender allow based on a given loan-to-value ratio?
- How much would you likely borrow if you used only part of that line?
- How much capital gains tax might be triggered if you sold instead of borrowed?
- How large could the loan balance become if interest accrues over time?
- What might heirs receive under a basis step-up versus a no-step-up scenario?
Why Investors Use This Type of Model
The strategy receives so much attention because taxes can materially change long-term wealth outcomes. Selling an appreciated asset triggers a recognition event. Borrowing usually does not. That distinction can preserve more capital inside the portfolio, which may continue compounding. For ultra-high-net-worth households, this can be significant because assets may appreciate faster than borrowing costs over long periods. However, it is not a free lunch. Loan terms can change, collateral values can decline, margin calls can occur, interest rates can rise, and tax law can change. A serious calculator needs to show both the upside and the structural risks.
Core Inputs and How to Think About Them
Current asset value is the market value of the collateral today. Cost basis is the tax basis used to determine gain if the asset is sold. The difference between market value and basis is the unrealized gain. Annual appreciation projects how much the asset might grow each year. While a simple fixed rate is useful for illustration, real portfolios experience volatility, so users should stress-test multiple scenarios.
Loan-to-value ratio determines borrowing capacity. If an asset is worth $10 million and the lender allows 40% LTV, the maximum line may be $4 million. Many securities-backed credit facilities and private bank lines are more conservative for volatile assets and somewhat more flexible for diversified portfolios with strong underwriting. Loan interest rate is critical because a low-cost loan can preserve the attractiveness of the strategy, while a high-cost floating-rate facility can materially erode the benefit.
Capital gains tax rate should reflect your likely combined burden. For some U.S. taxpayers, that may include the federal long-term capital gains rate and the 3.8% Net Investment Income Tax. State taxes can push the effective number even higher. Finally, the step-up assumption matters because current law may not remain current law forever. The benefit of buy borrow die is strongest when highly appreciated assets are not sold during life and heirs inherit assets with a stepped-up basis.
How This Calculator Interprets the Strategy
In this model, we compare two high-level paths. In the sale scenario, the owner sells today, realizes capital gains, pays tax, and is left with net after-tax proceeds. In the borrow scenario, the owner keeps the asset, allows it to appreciate over the selected period, then borrows against a portion of the projected value. The calculator also projects the future balance of that loan using either a simple accrual or an interest-only compounding approximation.
At the end of the chosen time horizon, the model estimates estate outcomes. If the step-up assumption is set to yes, the calculator treats the unrealized capital gain as effectively removed from income-tax recognition at death under current concepts of basis adjustment. If set to no, it preserves a tax drag on the appreciation. These estimates are intentionally simplified so users can understand the mechanics without having to build a custom family office model.
| Key Variable | Lower Range Example | Higher Range Example | Why It Matters |
|---|---|---|---|
| Annual appreciation | 3% to 5% | 7% to 10%+ | Higher growth can outpace borrowing costs and increase the appeal of holding instead of selling. |
| Loan-to-value ratio | 20% to 35% | 40% to 65% | Higher LTV creates more liquidity but also raises collateral risk and potential call exposure. |
| Borrowing cost | 4% to 6% | 7% to 10%+ | Higher financing cost can overwhelm any tax deferral benefit if asset returns weaken. |
| Combined capital gains tax | 15% to 20% | 23.8% to 37%+ | The more tax a sale would trigger, the more compelling a borrowing alternative may appear. |
Real Statistics and Official Reference Points
Any serious discussion of buy borrow die should be grounded in actual tax and estate figures, not vague slogans. For example, the top federal long-term capital gains rate in the United States has commonly been discussed at 20% for many higher-income taxpayers, and the 3.8% Net Investment Income Tax can apply as well, creating a commonly cited federal combined rate of 23.8%. These are core assumptions for many planning analyses and can be reviewed through the Internal Revenue Service.
Estate transfer planning also matters. The federal estate and gift tax exclusion has been historically high in recent years, but thresholds are scheduled and political rather than permanent. Official tax information and forms can also be verified with the IRS. For broader household wealth data and credit conditions, the Federal Reserve provides useful macroeconomic materials, while educational resources on intergenerational wealth and tax policy can be found through universities such as tax policy research centers and business schools.
| Official or Commonly Used Statistic | Figure | Relevance to Buy Borrow Die |
|---|---|---|
| Top federal long-term capital gains tax rate | 20% | Forms the baseline tax cost of selling appreciated assets for many high earners. |
| Net Investment Income Tax | 3.8% | Often added to long-term capital gains tax, creating a common 23.8% combined federal rate. |
| Typical private-bank asset-backed lending discussion range | Roughly 20% to 65% LTV depending on collateral | Shows why conservative LTV assumptions are important in strategy modeling. |
| Historical long-run U.S. equity return discussions | Often cited around 8% to 10% nominal over very long periods | Explains why some investors believe asset growth may exceed financing costs over time. |
Advantages of the Buy Borrow Die Concept
- Tax deferral: Borrowing usually does not trigger a taxable sale event, allowing appreciated capital to remain invested.
- Liquidity without liquidation: The owner can fund living expenses, acquisitions, philanthropy, or diversification strategies without immediately disposing of assets.
- Potential basis step-up: Under current law, heirs may inherit assets with adjusted basis, reducing embedded gain.
- Portfolio continuity: Founders and long-term holders may avoid disrupting a concentrated position they are reluctant to sell.
- Estate planning flexibility: The strategy can be paired with trusts, insurance, charitable structures, or family governance frameworks.
Main Risks and Weaknesses
- Collateral decline: If the pledged asset falls sharply, the borrower may face a margin call or be forced to add collateral or repay principal.
- Interest rate risk: Many private credit lines are floating-rate, and rising rates can materially increase the cost of maintaining debt.
- Tax law risk: Basis step-up rules, estate tax thresholds, or gain recognition rules can change by legislation.
- Concentration risk: The strategy is often used with appreciated single-stock positions, which can be highly volatile.
- Liquidity mismatch: Some assets are hard to value or hard to liquidate quickly, making borrowing more fragile in stressed markets.
Who Should Use This Calculator
This tool is most useful for investors who already understand capital gains, lending mechanics, and estate transfer rules. It is especially relevant for:
- High-net-worth households holding appreciated stock or real estate
- Entrepreneurs considering liquidity options without a full sale
- Family offices comparing debt-funded spending with outright liquidation
- Advisors building preliminary illustrations before formal tax and legal review
How to Read the Results
The most important outputs are the future asset value, the maximum credit line, the planned borrowed amount, the estimated tax from selling today, and the projected future loan balance. If your projected asset growth remains comfortably above borrowing cost and your LTV stays conservative, the strategy may look attractive. If rates are high, appreciation is weak, or LTV is aggressive, the strategy can become much less attractive very quickly.
Use scenario analysis rather than a single estimate. Try a pessimistic case with lower appreciation and higher rates. Then test a severe market decline. Buy borrow die is not really about maximizing spreadsheet output. It is about whether the strategy remains resilient under stress.
Best Practices Before Relying on a Buy Borrow Die Plan
- Confirm likely capital gains exposure with a CPA.
- Review estate implications with a qualified attorney.
- Understand lender call rights, collateral haircuts, and re-margining rules.
- Model state taxes, not just federal taxes.
- Stress-test floating-rate debt under higher interest-rate assumptions.
- Prepare a collateral management and liquidity contingency plan.
For official tax guidance and publications, start with the IRS. For macro-level credit and financial condition context, review materials from the Federal Reserve. For educational background on wealth, taxation, and intergenerational transfer concepts, university and policy-center research can provide helpful context, including resources connected to .edu institutions.