New York, July 12 (Xinhua)-Rising stock prices and solid interest rates have brought great benefits to rich Americans, The Wall Street Journal reported Monday.
“Banks say wealthy clients are borrowing more than ever and are taking out loans backed by a portfolio of equities and bonds,” the report said.
“Very wealthy people often use these loans as part of their’buy, borrow, die’strategy to avoid capital gains taxes,” the journal said.
For the borrower, the calculation is clear. If the assets rise faster than the interest rate on the loan, they come out first. And under current law, investors and their heirs do not pay income tax unless the shares are sold. According to the report, assets may be subject to inheritance tax, but heirs pay capital gains tax only on sale and only on profits after the death of the previous owner.
“The longer you can borrow, the longer you can hold your gratitude assets, and the longer you hold, the greater your tax savings,” he added.
Low interest rates, hot markets offer benefits to the wealthy in the United States: Media
Source link Low interest rates, hot markets offer benefits to the wealthy in the United States: Media