Live tax-free like a billionaire

👋🏾 Hey there, I’m Ronnie. Every week, I break down the money games the 1% play so the 99% can finally level up.

I wasn’t kidding when I said the rich play by a different set of rules.

What I’m digging into this week isn’t some exotic offshore scheme — it’s basic finance and tax law, executed at scale.

It’s the “borrow-against-assets” playbook.

Here’s how it works, and how you might be able to draw inspiration (if scaled appropriately) for yourself.

The Loophole: Buy, Borrow, Die

This is sometimes referred to as the Buy, Borrow, Die strategy. It is simple in concept, yet powerful in practice.

Step 1: Buy and hold appreciating assets

The first step is to accumulate assets that are likely to appreciate over time, such as stocks, real estate, private business equity, and even art or collectibles.

Because you don’t sell, any increase in value remains unrealized gains — gains on paper only, not taxed while unrealized.

Step 2: Borrow against those assets instead of selling them

When you need cash — for living expenses, new investments, lifestyle, acquisitions — wealthy individuals don’t sell. Instead, they take out loans, using their assets as collateral.

Because loans are not classified as income, the proceeds aren’t taxed as income or capital gains.

Here are some common tools they use:

• Securities-based lines of credit (pledging publicly-traded stock or investments) or margin/portfolio-backed credit lines.

• Real-estate–backed borrowing (home-equity lines, leveraged property, commercial real estate) for those whose wealth is property-heavy.

• For private business owners, borrowing against business equity rather than selling shares or stakes.

Step 3: Keep on growing and pass on a tax-free legacy

The magic happens over time: the underlying assets may continue appreciating, compounding growth year after year, all without triggering any taxable event, because nothing has been sold.

Then, eventually, when the owner dies, assets are transferred to heirs using a tax rule called step-up in basis.

That means the cost basis (the buy price for tax purposes) resets at the current market value when inheritance occurs, effectively wiping out any capital gains tax liability on decades of appreciation.

Heirs can then sell without owing capital gains, or hold and keep riding appreciation. For all practical purposes, the growth was never taxed.

Why It Matters and Why It’s So Powerful

Liquidity Without Taxes

Selling assets strips you of future upside; borrowing gives you cash and preserves growth potential. If the assets appreciate more than the interest cost on the loan, you win.

Tax Deferral + Potential Tax Elimination

Because you’re not realizing gains, you defer capital gains taxes indefinitely. With the step-up in basis at death, you may eliminate them altogether.

Generational Wealth Transfer

For those playing this game over decades or generations, it’s a way to pass on massive wealth, with minimal tax drag, to heirs.

Flexibility & Strategic Leverage

Borrowed funds can be redeployed — into businesses, real estate, art, other investments — amplifying wealth rather than shrinking it.

Real-World Examples

1. The Tech Founder With Concentrated Stock

Think of any big-tech founder who owns a mountain of stock in their own company. Pick one; the pattern is the same across the board.

They’re “asset rich, cash light.” Their net worth might be $50 billion on paper, but selling stock triggers capital gains, shakes investor confidence, and dilutes ownership.

So instead, they:

• Use their company shares as collateral.

• Open a massive securities-based credit line with a private bank.

• Borrow at ultra-low rates.

• Live on the loan proceeds.

• Repay using future liquidity events or never repay at all.

Public filings (for many public-company insiders) regularly show millions borrowed against stock positions.

Banks love it because lending against high-quality public securities is one of the safest loans in the world.

Founders love it because they never have to sell.

2. The Real Estate Mogul With Massive Equity

Take any well-known real estate dynasty. Again, no need to pick names; the pattern is identical across many families.

Here’s the play:

• They buy a property for $5M.

• Ten years later, it's worth $12M.

• Instead of selling, they refinance.

• They pull out $4–5M tax-free.

• They use that to buy more properties, repeat the cycle, build an empire.

This is why some families own hundreds of buildings without selling. They treat real estate like a self-refilling ATM — powered by appreciation, not taxable income.

And when parents pass assets down, heirs often receive the properties with a stepped-up basis. Nearly all the lifetime appreciation is wiped clean for tax purposes.

3. The Private Business Owner

Imagine someone who owns 100% of a private company worth $100M.

Here’s the twist most people never see: They often don’t sell their shares until very late in life (if at all).

Instead, they:

• Use company equity as collateral.

• Borrow at rates only private-bank clients ever see.

• Use the loan to buy real estate, fund other businesses, or expand operations.

• Let the business appreciate in value.

• Pass ownership into trusts for their heirs.

• Let the tax code wipe out unrealized gains at death.

No selling, no capital gains. Just long-term leverage and compounding.

The Simple Math

Let’s run a simple, realistic scenario using round numbers.

You have $2M in assets (stocks, real estate, or a mix). They’re expected to appreciate at 7% per year. You borrow against them at 4–6% per year.

Year 1

• Asset growth: $2,000,000 × 7% = $140,000

• Loan cost: $500,000 × 5% = $25,000

If the growth on the entire portfolio ($140K) comfortably exceeds the interest expense ($25K), borrowing is accretive.

You just:

• Kept the asset.

• Kept the growth.

• And got liquidity anyway.

Now, scale this to $20M or $200M portfolios. That’s why billionaires don’t flinch.

When it breaks

It breaks when:

• Asset growth < interest cost.

• Markets tank (margin calls are brutal).

• Debt is layered too aggressively.

• The borrower needs liquidity at the worst possible time.

This isn’t a hack, it’s leverage. And leverage can cut both ways.

How to Know Whether You’re Ready to Use This Strategy

Here’s my honest litmus test:

You’re ready when:

• Your assets are truly long-term.

• You have a stable income to handle interest.

• You understand market volatility.

• You’re not chasing lifestyle, but opportunities.

• You don’t need the borrowed money immediately in a crisis.

If any of those aren’t true, slow down. Leverage is a tool, not a personality trait.

The Wealth Ladder: A Strategy by Net-Worth Tier

I’m not going to pretend everyone reading this has the same starting point.

So here’s a tiered breakdown, from beginner to affluent, with practical steps each group can take today.

Tier 1: Early Builders ($0–$150K Net Worth)

This crowd needs to focus on building the foundation that the wealthy eventually borrow against.

Your priority: Buy assets that appreciate, don’t overcomplicate it.

Action steps:

• Start a simple, automated investing plan (index funds; boring is beautiful).

• Keep your debt low and flexible.

• Build a cash buffer so you never have to sell assets in a downturn.

• Ignore leverage for now, you’re building the base layer.

Mindset shift:

• Don’t sell prematurely.

• The wealthy win mostly by doing nothing.

Tier 2: Emerging Wealth ($150K–$500K Net Worth)

This is where leverage becomes a possibility, not as a lifestyle trick, but as a tool.

Your goal: Set up the infrastructure so you can access liquidity without selling things.

Moves that make sense:

• If you own a home, explore a HELOC as an emergency buffer (not a spending fund).

• If you have a brokerage account, ask about a Portfolio Line of Credit (PLOC). Not to use today, but to have.

• Begin thinking in decades, not paychecks.

This is where you mimic the wealthy’s first habit: Create options without triggering taxes.

Scripts below will help you ask for these credit lines.

Tier 3: Growing High Earners ($500K–$2M Net Worth)

Now you’re in the zone where the borrow-against-assets model becomes practical.

Your goal: Use leverage strategically to accelerate opportunities, not to inflate lifestyle.

Smart uses:

• Use your PLOC to avoid selling when you need temporary liquidity.

• Use a HELOC to renovate value-adding parts of a home or acquire a rental property.

• Use debt as bridge financing, not permanent financing.

• Begin thinking about legal structures: trusts, LLCs, and insurance-wrapped assets.

This is the level where you start building patterns that compound for decades.

Tier 4: Affluent / High-Asset Individuals ($2M–$20M+)

This is where everyday readers start to resemble ultra-wealthy patterns.

Your goal: Use structured borrowing as a tax-efficient cashflow strategy and a compounding accelerator.

Examples:

• Live off low-interest credit lines during high-tax years.

• Borrow to fund investments that yield above your interest cost.

• Strategize around carry-forward losses, trust structures, and estate planning.

• Keep your selling minimal to maximize long-term unrealized appreciation.

This is the level where the wealthy kick into Buy → Borrow → Hold → Pass Down.

And it works.

Step-by-Step Starter Plan (For Anyone Ready To Apply This)

Think of this like a playbook you can screenshot or send to a friend.

Step 1: Identify Your Core Assets

What do you own that reliably appreciates?

• Home equity.

• Investment portfolio.

• Business equity.

• Rental properties.

• A growing side business.

That’s your engine. Everything else is noise.

Step 2: Make Your Assets Borrowable

The wealthy don’t wait until they need a loan. They get the line of credit first.

Steps:

1. Open a margin-enabled brokerage account.

2. Ask your bank about a HELOC if you own a home.

3. If you own a business, explore an SBA-backed line of credit or asset-backed loan.

4. Keep loan-to-value ratios conservative (the rich do this!).

This is infrastructure, not debt.

Step 3: Only Borrow for Productive Reasons

Clear green-light uses:

• Buying another asset.

• Business expansion.

• Value-adding real estate improvements.

• Bridging short-term liquidity without selling assets.

• Tax-planning purposes during high-income years.

Absolute red-light uses:

• Vacations.

• Cars.

• Lifestyle upgrades.

• Anything that doesn’t generate ROI.

• Anything that can be paid from cash flow instead.

This strategy only works when your assets outperform your interest costs. Lifestyle debt flips the math upside down.

Step 4: Never Let the Loan Outgrow the Asset

Your personal rule of thumb (the wealthy live by this quietly):

“Never borrow more than 20–40% of the collateral’s value.”

At the billionaire level, they’re often below 10–15%.

• Low leverage = safety.

• Safety = longevity.

• Longevity = compounding.

Step 5: Play for the Long Game

If you plan to sell your assets in 1–3 years, this won’t work. You need runway.

The real fuel of this strategy is:

• Time.

• Patience.

• Compounding.

• Discipline.

Boring habits create shocking results over 20+ years.

Scripts: What to Say to a Bank or Advisor

Script for Opening a Portfolio Line of Credit

“Hi, I’m looking to set up a portfolio line of credit. I’m not looking to use it today. I just want liquidity options without needing to sell investments and trigger taxes. What are your interest rates, minimums, and loan-to-value requirements?”

Script for Exploring a HELOC

“I’m considering a HELOC for long-term financial flexibility. I’m not planning to draw on it, but I want the option. Can you walk me through your rates, repayment terms, and any fees to keep it open?”

Script for a Small Business Owner

“I’m evaluating ways to access liquidity without selling equity. What asset-backed credit lines or SBA-backed options are available to business owners with consistent revenue?”

Script for a Financial Advisor

“I want to understand how the borrow-against-assets approach fits into tax planning and liquidity management. Under what conditions should I consider a credit line versus selling assets? And how do I manage risk during market volatility?”

Red Flags: Don’t Even Think About This If…

Stop yourself immediately if:

• You’re borrowing to cover overspending.

• You need liquidity for emergencies (that’s what cash is for).

• You’re uncomfortable with volatility.

• You’re investing in something you don’t understand.

• You can't handle the interest payments with your income.

• You’re using this to look rich.

This strategy is a wealth multiplier, not a wealth starter.

What I Want You To Take Away

The wealthy don’t out-hustle people; they out-structure them.

They understand:

• Assets grow.

• Taxes shrink growth.

• Borrowing keeps assets compounding.

• And time does the heavy lifting.

You can adopt the same philosophy, at your scale, starting today. Over a decade or two, it changes everything.

Until next time…

If you know someone who’d love this, don’t be selfish. Don’t forget to:

• Follow me on LinkedIn for more.

• Listen to the Margin of Curiosity podcast.