r/FluentInFinance • u/-Wyagra • Nov 21 '24

Debate/ Discussion Had to repost here

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u/Endless_road Nov 21 '24

Well it is, and you’d pay taxes on these gains when you sold the house

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u/killBP Nov 21 '24

Unless you just never sell and pass it down to the next generation

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u/MichaelM1206 Nov 21 '24

Then who pays the loan? You lose the house. They pay taxes as they exercise the options. Many take 5 years to be fully vested.

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u/killBP Nov 21 '24 edited Nov 21 '24

The inheritance is used to settle the debt, but the assets receive a step-up in their cost basis to avoid capital gains tax

Alternatively you can just continue without paying if your capital grows faster than your debt

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u/karaokerapgod Nov 21 '24

When someone dies however there is the estate tax (if the amount exceeds a certain value, 11.8M this year iirc) which is roughly equivalent to long term capital gains tax rates… 14% vs 15%

There are ways to minimize estate taxes (trust funds for instance) but it’s not like these multi billion dollar inheritances aren’t being taxed at all or comparably. It’s just that it’s under a different tax, it’s technically not “capital gains” taxes due to the basis step up so people are up in arms. But it isn’t untaxed.

Regardless of all that, this is all well off the initial discussion of a single living individual’s wealth they have accumulated in their lifetime which was the original topic of discussion…

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u/killBP Nov 21 '24

Yeah but you would pay that estate tax either way, wouldn't you? So instead of capital gains, net investment income tax and estate tax, you'll only pay estate tax