You’ve probably heard wealthy Americans talking about “Buy Borrow Die”, or the slightly more dramatic “Borrow Until You Die”?

It sounds like some kind of billionaire loophole, doesn’t it?

In simple terms, the strategy works like this:

• You buy assets which rise in value
• You borrow against them instead of cashing them in…
• …which triggers a tax event
• And then you die owning those assets (and hopefully pass them on efficiently to your kids)

The key point you need to lodge in your head about this is – you generally don’t pay tax when you borrow money.

Many wealthy people avoid tax events as much as possible, which is the buy and never sell part, because it’s selling the asset which triggers the tax event.

That’s the core idea behind Buy Borrow Die.

BUT – and it’s quite a big but – the Buy Borrow Die strategy is more suited to the US tax system. However, we can still benefit from aspects of the strategy here in the UK.

Not to become Silicon Valley billionaires with oversized yachts, but as a tool to build our wealth more intelligently.

It’s not dodgy, either!

I have to get this off my chest – I put my heart into an answer on Quora how regular people can save tax using the strategies in my book, like salary sacrifice to avoid 40%+ tax brackets etc, and some guy wrote a vicious answer about how he hates people like me who “dodge tax”.

He then trolled everything I’ve written on Quora to make as many ridiculous comments he could think of, until I blocked him.

The truth is, wealthy people harness the UK tax system all the time – it’s actually a very good system for building wealth. Most regular people just don’t understand it, but they should, because it can be life changing.

So let’s start by saying this – borrowing against assets is not tax evasion.

It’s actually very normal.

Banks lend against:

• houses
• investment portfolios
• businesses
• property portfolios

every single day.

The wealthy simply understand something most of us ordinary people don’t, but should.

We tend to assume the only way to benefit from an appreciating asset is by selling it, but you don’t need to sell it to benefit from its value.

Why the wealthy often avoid selling

Let’s say you bought a rental property for £200,000.

Twenty years later it could be worth £500,000.

You now have £300,000 in gains.

If you sell it:

• you trigger Capital Gains Tax
• legal fees
• estate agent fees
• possible mortgage exit costs

The asset is gone.

But what if instead you refinance it and release £100,000?

You now have access to cash without selling the asset.

And crucially…. borrowed money is not taxable income.

That’s the really interesting part of the Buy Borrow Die strategy which we can use in the UK.

Let’s clear up Good Debt vs Bad Debt

Most people think debt makes you poorer. Needless to say, I have entire chapters in my book which discuss how bad debt is, how it’s a first world problem, and why we should clear debt immediately.

Although I do have in brackets (except, perhaps, mortgage debt), which I could probably expand on a little.

You definitely should avoid bad debt.

Car finance on a depreciating car? Usually bad.

Credit cards funding lifestyle spending? Definitely bad.

This kind of debt is pointless, costly, and like Albert Einstein cleverly pointed out, is the terrible opposite of compound interest.

Good debt on the other hand, such as lower interest debt on an appreciating asset (like a mortgage on a property), can be completely different.

This is because, over long periods, a well-chosen asset (and of course the right market etc) will often rise faster than the interest charged on the debt secured against it.

For example:

• your rental property may rise 7% annually
• your mortgage rate may average 4%
• meanwhile your tenant may help repay the debt

The same idea can apply to:

• stock portfolios
• businesses
• even your own home (more so if you bring in a lodger)

Used carefully, debt can accelerate your wealth rather than destroy it, which is something we should care about, right?

How we can use Buy Borrow Die in the UK

The UK version of Buy Borrow Die is less about gaming the system, and more about smart long-term financial planning.

Let’s consider some realistic situations for regular folk to help explain this…

Using property equity to build investments

Let’s say:

• your home is mostly paid off
• it has risen significantly in value
• you have spare income

Instead of leaving all that equity trapped inside the walls of your house, you could potentially remortgage a portion of it and invest into:

• Stocks & Shares ISAs
• pensions (like a SIPP)
• index funds (via either of the above, a general investment account, etc)
• another property, like a Buy To Let (BTL) or the Airbnb you fancy running.

I must add this obviously carries risk (and you should always speak to a professional financial advisor etc etc).

But historically, global investments have often outperformed mortgage interest rates over long periods.

I suppose the key is moderation, not gambling your house on crypto because somebody on YouTube wears sunglasses indoors and comes across like they know what they’re talking about… when they probably don’t.

Using a rental property to fund retirement

This is where things become genuinely interesting as you reach your mid-life crisis stage and start nearing retirement.

Imagine you own a rental property outright by the time you retire (like I do).

Instead of selling it and triggering Capital Gains Tax, you could:

• keep the asset
• continue receiving rent
• potentially borrow modestly against it later if needed

That released money could help:

• buying a Lamborghini (well, I can’t not say that, can I?)
• supplement your retirement income
• fund some amazing travel
• help your children get onto the property ladder
• reduce the need to sell any investments during an unfortunate market crash

Meanwhile, the property may continue appreciating in the background.

Recycling wealth into tax wrappers

This is one of the smarter UK angles.

Imagine you release equity from property at 4-5% interest.

You then gradually move money into:

• ISAs
• SIPPs
• diversified investments

Over time you shift wealth from taxable assets into tax-efficient wrappers.

That can:

• reduce future tax
• simplify retirement
• increase long-term compounding

Very boring I know, but also very effective – so take note! (Read my book Minimalist Investor if you want a heads up on all this stuff which hopefully isn’t as boring)

Why ISAs and pensions matter more than most people realise

This is where many UK investors miss the bigger picture.

The true power move often isn’t property like it is in other countries (I spent half my life in Australia where property is the main investment due to a thing called negative gearing which offsets mortgage interest from your income).

The UK tax system has a lot of opportunities, and one advantage is your ability to combine appreciating assets with tax shelters like ISAs and pensions.

A quick reminder of the benefits of an ISA (a great perk of living in the UK):

• gains are tax free
• dividends are tax free
• there’s usually no CGT reporting

Inside a pension:

• you receive tax relief
• investments compound tax efficiently (In Australia you pay tax on the way in, which means less money to grow – big difference!)
• employers may contribute too, such as with the salary sacrifice superpower

I see ISAs and pensions as highly beneficial wealth-building tools, which most people in the UK completely fail to capitalise on (which is why so many struggle through retirement uneccesarily).

The “die” part of Buy Borrow Die

Die! It’s so morbid isn’t it! But this part really matters (and is, unfortunately, an inevitable fact of life… at the time of writing at least!)

Under current UK rules, assets passed on at death generally receive a CGT uplift to current market value.

That means unrealised capital gains can effectively disappear for tax purposes when inherited, potentially leaving your kids in a much better financial position.

However, the UK also has Inheritance Tax (IHT), so having assets at the time of death is not the magical escape hatch we would like.

Still, it may explain why so many wealthy people prefer:

• holding assets long term
• borrowing strategically
• avoiding unnecessary selling

rather than constantly cashing out investments and paying more tax as a consequence.

The biggest mistake people make

The internet loves making leverage sound risk free, when it simply isn’t.

In the UK, property hasn’t appreciated like it did for our ancestors before the turn of the century. If asset prices fall while interest rates rise, things can unravel quickly.

The sensible approach is usually:

• moderate debt
• quality assets
• long-term thinking
• strong cash flow
• plenty of buffer room

Buy Borrow Die is not about pretending debt doesn’t matter, it’s about understanding how some debt can quietly help us build wealth faster than endlessly selling our best assets – because when they’re gone, they’re gone, which includes lots of your hard-earned £s to the tax man.

This is stuff worth considering, isn’t it?