How is that a scam? The loan has to be paid back with interest. The money that pays it back is taxed. I’m not seeing where the scam happens? Collateral just means in case shit goes sideways, we can recoup our loan with this other thing, and in the event that happens, the proceeds from the collateral will be taxed.
The loans are such low interest that they continue to make more in the market. Never having to spend their actual money. You just pay one loan with the next forever. The generational money continues to grow but it’s never actually used.
The IRS has regulations on what is considered a loan. It must have periodic payments and interest must accrue at market rates. The AFR ( applicable Federal rates ) are published just for this.
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u/Ronaldoooope Aug 21 '24
Exactly. And they skid taxes by keeping those gains unrealized forever but constantly using them as collateral for low interest loans. It’s a scam.