How the Ultra Wealthy Use Tax Loopholes to Avoid Paying Capital Gains Taxes

Here is exactly how I would use two tax loopholes of the ultra wealthy to avoid paying taxes on hundreds of thousands, if not millions of dollars of capital gains throughout my life.

I'm Tyler, a former financial advisor and portfolio manager. Now, I make financial content for free so that you don't have to pay for it.

Loophole #1: The 1031 Exchange

Number one, I will buy an investment property early in my life. And I'll buy it in a location where I'm pretty sure the value will increase over time. After five years, I'll sell it and not pay one penny of taxes on the capital gain because I'll take advantage of the 1031 exchange. I just have to reinvest the gains immediately, which I want to do anyway, into a similar property of equal or greater value.

Loophole #2: Step-Up Basis

Number two, I'm just going to commit my life to acquiring property of greater and greater value, and I'll just keep deferring those taxes. And now, I'll just make sure to leave these assets to my daughter in a trust.

My daughter will inherit a $250 million portfolio of real estate that I paid about a million dollars for. Thanks to loophole number two, step-up basis, that $249 million of deferred tax disappears, gone. She can turn around and sell every one of those properties the next day and not pay one dime of taxes on 60 years of accumulated wealth.

If any of this is helpful, like and follow, and I'll keep trying to get you one step closer to where you need to be.

Source