[arrosenberg]

If it's a bad idea, it's a bad faith argument - why would you suggest it? The tax laws shouldn't favor the gross accumulation of wealth, nor the starvation of the treasury, so the laws need to change to force the rich to pay their fair share.

[fn-mote]

> If it's a bad idea, it's a bad faith argument

I believe the GP is just cautioning rando HN readers that they should not rush out and make their down payment in the manner described, as opposed to liquidating some of their stock options for "real cash" like the GGP had to do.

They are just explaining a reasonable method that the (above) average HN reader could use to be in the same situation as Bezos of having a 0% tax on their down payment.

In the US, there's a pretty massive exemption (well, deferral) for capital gains tax on the sale of a primary residence, so once you have one home to work with, the down payment is (kind of?) tax-free anyway.

[arrosenberg]

They definitely shouldn't. It's absurd to suggest that because a middle-class homebuyer can get a margin loan through iBroker means that we should let the richest people in history dodge taxes in this way. If no one would actually do that, then it really doesn't matter that they technically can. The obvious solution is to take away the privilege from the wealthy and make them abide the same rules as the rest of us.

[RhysU]

> They definitely shouldn't.

Never give absolute financial advice to anyone who's situation you don't fully understand.

[arrosenberg]

Nah, I’m pretty comfortable that 99.99999% of people should not take a margin loan to buy a house. Close enough for me.

[RhysU]

A fair number of people do use margin for down payments until they can sell assets to cover the margin.

It's not uncommon when people buy deals while traveling or in hot markets.

See also Mr Money Mustache's articles on this topic. He assuredly is not Bezosesque.

[RhysU]

Here's the Mr. Money Mustache article I referenced: https://www.mrmoneymustache.com/2021/01/29/margin-loan-ibkr-...

Another very rational reason for such a margin loan for a home down payment is if the stock you wanted to sell hadn't been held for a year and therefore its sale would not yet qualify for long-term capital gains rates.

You might choose to pay margin interest for up to a year so that the stock sales become taxed at the much lower long-term capital gains rates instead of like income.

That might make sense for someone in the 24% federal bracket which ends at just under $200K of annual income, depending upon how much longer one needs to hold the position to achieve the more favorable taxation. Certainly far below the yacht-owning bracket.