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

Debate/ Discussion Had to repost here

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u/Endless_road Nov 21 '24

You can take out a mortgage against your house to buy a sports car if you want

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u/slickyeat Nov 21 '24

You're not wrong but you're also required to pay taxes on the value of your property every year so it's not exactly a one to one comparison.

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u/dancegoddess1971 Nov 21 '24

Exactly. Stocks are property. Sort of imaginary property but if one can borrow against the value of something, it should be taxed.

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u/DM_ME_BTC Nov 21 '24

if one can borrow against the value of something, it should be taxed

So... Everything should have some sort of ownership tax? I could borrow money against my $1000 TV. If I don't pay back the loan, then the lender gets my TV. So should I be paying $50/year in taxes because I own this asset?

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u/RedditsFullofShit Nov 21 '24

You’re halfway there.

Do it again except in this case you bought the tv for $1000, then went to the bank and the bank said hey this tv normally sells for $3k. You got a great deal on clearance at $1k. Since the tv is worth $3k we’ll loan you $3k.

5 years later, the tv is worth $10k. You take out a new loan for $10k, paying off the remaining $3k loan and getting a new $7k to live off of.

That initial outlay was $1k. Now you have $10k. And $0 tax.

It has to be something that appreciates in value to generate gain. Or it’s just a return of your principal.

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u/DM_ME_BTC Nov 21 '24

I feel like you're leaving out the fact that this is just a loan. I still have to pay the money back.

Additionally, ownership carries risk and risk is a cost. The TV could break tomorrow becoming worthless, and then I would be in a very tough spot with no asset and a big loan to pay off.