The Buy, Borrow, Die Method: Getting Cash Without a Taxable Event

A lot of investors have appreciated stock or crypto sitting in their portfolio and only see one way to turn it into usable cash, sell it. The problem is that selling triggers a capital gain right away, and once you sell, you're out of the position for good. If that asset doubles again next year, you don't see a dollar of it.

There's a strategy institutional investors and high net worth families have used for years that most retail investors never hear about, buy, borrow, die. The name gets thrown around online but the middle part, the borrow step, is rarely explained, and it's the part that actually makes this work.

Here's the framework. You buy an appreciating asset, whether that's a public stock or eligible crypto. When you need cash, instead of selling, you borrow against the position. No sale means no taxable event. Eventually, at estate transfer, heirs receive a stepped up basis and the embedded capital gains disappear entirely.

The tool behind this is a securities backed line of credit. Shares or eligible crypto go into regulated custody under a control agreement, usually with a custodian like BNY, JPMorgan, Citibank, or Fidelity. The lender then advances cash against the pledged position without requiring a sale.

It's a non recourse structure too. If the loan isn't repaid, the lender's remedy is limited to the pledged shares themselves, never the borrower personally. There's no FICO score or credit check involved since underwriting is based entirely on the value and liquidity of the asset.

A few numbers worth knowing. Loans typically range from $50K up to $500M or more, sized to the value of what's pledged. LTV runs up to 75% on unrestricted, liquid shares, and 30% to 50% on restricted stock. Rates run 1.5% to 7% annually, interest only, usually paid quarterly. Terms are typically 3, 5, 7, or 10 years, and funding usually takes 5 to 10 business days once diligence and custody setup are complete.

This isn't free money and it isn't without risk. The pledged collateral is still exposed to the market, and a significant price drop can mean posting additional collateral. In some cases the lender can force a sale of the pledged shares to recover the loan. Interest also accrues for the full life of the loan regardless of what the underlying asset does. None of this is tax, legal, or investment advice, so it's worth a real conversation with your own advisor before moving forward.

This strategy tends to fit accredited investors with a genuine, liquid stock or crypto position, including company insiders holding restricted stock who can't sell freely. Positions generally need a minimum daily trading value around $30K, with clear, disclosed ownership. It's not built for illiquid or thinly traded positions, and it's not for anyone unwilling to place shares into custody for the loan term.

For real estate investors specifically, this can be a useful piece of the puzzle when a chunk of net worth is sitting in a brokerage account rather than in property. Instead of liquidating a stock position to fund a down payment or a renovation, you can borrow against it and keep both the position and the deal moving. I've seen this come up more as investors diversify outside real estate and still want liquidity without giving up long term holdings. 

The bigger idea here isn't really about stock or crypto specifically, it's about how the wealthiest investors think about liquidity. They don't sell appreciating assets to access cash, they borrow against them, stay invested, and let compounding keep working while deferring the tax bill indefinitely.