Buy, Borrow, Die Strategy: How to Access Cash Tax Free
If you have watched wealth grow in a stock or crypto portfolio, you have probably run into the same wall every investor eventually hits. You want to use some of that value, but selling means handing a chunk of it straight to the IRS and giving up any future upside for good.
There is a strategy the wealthiest investors and family offices have used for decades to get around this, and it has a name that shows up constantly in tax and estate planning circles: buy, borrow, die. The "buy" and "die" parts get explained often. The "borrow" step, the part that actually makes the whole thing work, rarely does. This guide breaks down exactly how it works, what it costs, what it risks, and who it is actually built for.
What Is the Buy, Borrow, Die Strategy?
The buy, borrow, die strategy is a three part framework for holding and using wealth without ever triggering a taxable sale.
- Buy an appreciating asset, such as public stock or eligible crypto.
- Borrow against that asset when you need cash, instead of selling it.
- Die, at which point your heirs receive a stepped up basis on the asset, and the capital gains that built up during your lifetime disappear for tax purposes.
The strategy has drawn attention because of how effectively it is used by the ultra wealthy. ProPublica's Secret IRS Files investigation found that the 25 richest Americans saw their combined wealth grow by $401 billion between 2014 and 2018, while paying federal income tax equal to a true tax rate of just 3.4% of that growth (Americans for Tax Fairness). Borrowing against appreciated assets instead of selling them is a core reason that rate stays so low.
Why Selling an Appreciated Position Costs You Twice
Say you hold a stock or crypto position that has grown significantly in value. The obvious move when you need cash is to sell part of it. Two things happen the moment you do.
First, selling triggers a taxable capital gain. For 2026, long term capital gains are taxed at 0%, 15%, or 20% depending on your income, with the 15% bracket starting at $49,451 for single filers and $98,901 for those married filing jointly, and the 20% bracket kicking in above $545,500 for single filers (Fidelity). On a large gain, that is a real dollar amount leaving your pocket immediately.
Second, you are out of the position. If that stock or crypto asset doubles again next year, you do not participate in any of it. You already exited.
The buy, borrow, die approach avoids both problems by never triggering the sale in the first place.
How the Borrow Step Actually Works
The tool that makes the middle step possible is a securities backed line of credit, sometimes called securities based lending or SBLOC.
Regulated Custody
Your shares or eligible crypto are placed into regulated custody under a control agreement, typically with a major custodian. You retain ownership of the position the entire time.
The Cash Advance
The lender advances cash against the value of the pledged position. There is no sale involved, which means no capital gain is realized and no tax event is triggered. FINRA describes this structure clearly: lenders typically allow borrowing against 50% to 95% of portfolio value, and payments are usually interest only (FINRA).
A Non Recourse Structure
Depending on the lender and the loan structure, this can be built as a non recourse loan, meaning the lender's remedy in a default is limited to the pledged shares themselves, not the borrower personally. Underwriting is based on the asset rather than a credit score.
Buy Borrow Die by the Numbers
Loan terms vary by lender, asset type, and portfolio composition, but here is a general range for securities backed lending:
- Loan size: From roughly $50,000 up to $500 million or more, sized to the value of the pledged position
- Loan to value: Up to around 75% on unrestricted, liquid shares, and 30% to 50% on restricted or insider stock
- Rate: Roughly 1.5% to 7% annually, typically interest only and paid quarterly
- Terms: Commonly 3, 5, 7, or 10 year durations
- Funding speed: Usually 5 to 10 business days once diligence and custody setup are complete
If you want to see what this could look like against your own portfolio, our calculators are a good starting point, and you can apply directly when you are ready to move.
The Real Risks of Borrowing Against Your Portfolio
This is not free money, and it is not risk free. Before using this strategy, understand what you are actually taking on.
Market exposure remains. Your pledged collateral is still exposed to market swings. The SEC's Investor.gov alert on securities backed lines of credit warns plainly that "market volatility can magnify your potential losses, placing your financial future at greater risk" (Investor.gov).
Forced sale risk. If your collateral value falls far enough, you can receive a maintenance call requiring you to post more collateral or repay within a matter of days. If you cannot, the lender can force a sale of the pledged shares to recover the loan, sometimes without advance notice.
An unexpected tax bill. Ironically, a forced liquidation can trigger the exact capital gains tax event you were trying to avoid in the first place.
Rising rate exposure. Many of these loans are priced as a spread over a benchmark rate like SOFR or prime, so your borrowing cost can climb if rates rise.
Ongoing interest costs. You owe interest for the full life of the loan regardless of what happens to the underlying asset's value.
None of this is tax, legal, or investment advice. Talk to a licensed professional about your specific portfolio before using this strategy.
Who Buy Borrow Die Is Actually Built For
This strategy fits a specific type of investor, not everyone with a brokerage account.
It tends to work for: - Accredited investors with a genuine, liquid stock or crypto position - Company insiders holding restricted stock who cannot sell freely - Positions with a minimum daily trading value generally around $30,000 or more - Investors with clear, fully disclosed ownership of the pledged shares
It generally does not work for: - Illiquid or thinly traded positions that fall below minimum volume thresholds - Anyone unwilling to place shares into custody for the duration of the loan term - Anyone without a clear repayment plan going in
The Stepped Up Basis: Why "Die" Matters
The final piece of the strategy is what happens to the asset at death. Under current IRS rules, an heir's cost basis in an inherited asset is stepped up to its fair market value on the date of death. If an investor bought stock for $20,000 that grew to $35,000 by the time it was inherited, the heir's new cost basis becomes $35,000, and if they sell right away, there is no capital gain to report at all (SmartAsset). Every dollar of appreciation that built up during the original owner's lifetime is effectively erased for tax purposes.
That is the piece that closes the loop. Borrow instead of sell during your lifetime, and let the stepped up basis clear the embedded gain when the asset eventually transfers.
Is the buy, borrow, die strategy legal?
Yes. Borrowing against appreciated stock or crypto through a securities backed line of credit is a legal and widely used financing tool. It has drawn political attention specifically because it is legal and effective, which is why it shows up in tax policy debates (Yale Budget Lab).
Do I pay taxes when I borrow against my stock?
No. Borrowing is not a taxable event because you have not sold anything. Taxes only come into play if your position is later force sold to cover a shortfall, or if you eventually sell it yourself.
What happens if my stock or crypto drops in value?
If the value of your collateral falls enough, you may receive a maintenance call requiring you to post additional collateral or repay part of the loan quickly. If you cannot meet that call, the lender can sell the pledged shares to cover the balance.
Can I use crypto instead of stock for this strategy?
Yes, in many cases. Eligible, publicly traded crypto assets can be pledged as collateral in the same way as stock, subject to the lender's eligibility and custody requirements.
Is this the same as a margin loan?
No. A traditional margin loan is typically full recourse and tied directly to your brokerage account. A securities backed line of credit can be structured as a separate, non recourse facility depending on the lender and terms.
Ready to See What This Looks Like With Your Numbers?
The framework is simple to describe, but the right structure depends entirely on what you are holding, how liquid it is, and what you actually need the cash for. That is where a real conversation makes the difference between borrowing smart and creating a problem for yourself.
Book a free strategy call to map out your gap funding, paydown, and 0% stack timeline, or explore the toolkit to see the other tools available alongside securities financing.
Want to see what this looks like with your own numbers? Book a free strategy call to map out your gap funding, paydown, and 0% stack timeline.
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This article is for educational purposes only and isn't financial, legal, tax, or investment advice. Credit and financing outcomes depend on your own situation. Talk to a licensed financial professional before making funding decisions for your business.