Many wealthy individuals see borrowing against assets as a go-to strategy when they need liquidity. They often avoid selling appreciated assets like stocks, real estate, or luxury watches. Why? Because selling triggers capital gains taxes, and sometimes at steep rates.
This approach lets you tap into the value of what you already own, without giving it up or facing immediate tax consequences. It’s a financial tactic that quietly powers the lifestyles of the ultra-wealthy. Think of it like this: your portfolio grows, your watch gains value, your property appreciates. Yet you still keep them and borrow at low interest rates using those assets as collateral.
This method is known in wealth circles as the “Buy, Borrow, Die” strategy. It allows you to live off borrowed funds while your investments continue to grow. And because loans aren’t considered income, there’s no capital gains tax bill waiting for you at the end of the year. It’s not about escaping taxes; it’s about deferring them in a legal, elegant way that preserves long-term wealth. Do you own valuable assets and want cash without compromise? This article will equip you with the most powerful financial tool you’re not using yet.
What is Borrowing Against Assets?
Imagine unlocking the value of your portfolio, real estate, or even a prized luxury watch, without ever selling a thing. Borrowing against assets is how many high-net-worth individuals are doing just that. By using valuable holdings as collateral, you can access liquidity without disrupting your investment strategy or triggering a massive tax bill.
Think of it like a mortgage or car loan, but tailored to your entire balance sheet. Are you pledging a luxury watch, stocks, fine art, or real estate? The process is simple. The lender assesses the value of your asset, issues a secured loan, and holds the asset as collateral. If the loan isn’t repaid, they recoup their funds by selling the asset. But done responsibly, it’s a powerful tool for preserving and growing wealth.
What Can You Use as Collateral?
The range of acceptable collateral is surprisingly diverse. Let’s break it down:
Real Estate
Primary residences, vacation homes, and commercial properties can all serve as security for loans. This includes mortgages, bridge loans, or home equity lines of credit (HELOCs). In many cases, you can tap up to 70–75% of the appraised value without selling a square inch of your home.
Marketable Securities
Your investment portfolio, like stocks, bonds, and ETFs, can be used to secure a margin loan or a securities-backed line of credit. Depending on the asset type and volatility, you might access 50–70% of the portfolio’s value in cash, often within days.
Fine Art and Collectibles
Yes, your Warhol or Basquiat can fund your next investment move. High-value pieces of art, antiques, or even rare artifacts can be used as collateral while remaining safely in your possession. With the right lender, it’s possible to secure loans against multimillion-dollar collections without shipping a single canvas.
Luxury Assets
Specialty lenders now accept watches, vintage cars, high jewelry, rare wines, and even yachts as collateral. A Richard Mille, for example, doesn’t just look good on your wrist; it can serve as working capital. Platforms like Ameta make it easy to leverage luxury without red tape or credit checks.
Why Wealthy Individuals Choose This Route
Borrowing against assets is beyond a mere financial maneuver; it’s a mindset. Here’s why this strategy has become increasingly popular among the affluent:
Liquidity Without Sacrifice
You can free up cash without touching your investments. That means your real estate can continue appreciating, your art can stay on your wall, and your stock portfolio keeps compounding. This is especially useful for funding time-sensitive opportunities or large personal purchases.
Opportunity-Focused Funding
Need to bridge the purchase of a new home? Invest in a new business? Or simply finance a dream vacation without cashing out securities? Asset-backed loans can often be arranged within days and at competitive rates. This makes them ideal for seizing opportunities without friction.
Capital Gains Tax Advantages
This is where the strategy truly shines. Selling an appreciated asset triggers capital gains taxes, and sometimes, a significant chunk. But borrowing against it? That’s not taxable income. You get liquidity, keep the asset, and avoid unnecessary tax events.
Lower Borrowing Costs
Since the loan is backed by something tangible, lenders view it as less risky. That usually translates to better interest rates and terms compared to unsecured debt. Plus, many lenders don’t require a hard credit check; your asset does the talking.
Stay Invested
Timing the market is tricky. By borrowing instead of selling, you avoid pulling money out at the wrong time. This allows your investments to keep growing and helps you avoid regrets during bullish rebounds.
Capital Gains Taxes: The Hidden Cost of Selling a Luxury Watch
Are you about cashing in on your prized timepiece, be it a Rolex Daytona, a Patek Philippe Nautilus, or a Richard Mille? Be prepared for one less glamorous detail: capital gains tax.
Here’s how it works. When you sell a luxury watch for more than you paid, the IRS treats that profit as a capital gain. And depending on how long you held the watch, you could owe anywhere from 10% to 37% in taxes on that gain.
Short-Term vs. Long-Term Gains
Sell within a year? The IRS considers it a short-term gain, and it gets taxed like regular income, potentially up to 37%. Hold onto it for more than 12 months, and it becomes a long-term gain. It could be taxed at lower rates of 0%, 15%, or 20%, depending on your income bracket. Most high-net-worth individuals land in the 15% category. However, if your watch is classified as a “collectible,” the long-term tax rate can go up to 28%. And if you earn over $200,000 as a single filer, or $250,000 as a couple, you may owe extra tax. It’s called the 3.8% Net Investment Income Tax.
Why Timing Matters
Let’s say you bought a Rolex Daytona for $25,000 and sold it two years later for $40,000. That’s a $15,000 gain. If it’s a long-term sale, you might owe about $2,250 in taxes at a 15% rate. Now, imagine you’d flipped it after just 8 months; the same gain could be taxed at up to 37%, or $5,550. That’s over twice as much.
Or take a Patek Philippe you picked up for $100,000 and sold for $150,000. That $50,000 gain, long-term, could cost you $7,500 in taxes. Short-term? You might owe as much as $18,500. That’s a $11,000 difference; it is money that could fund your next acquisition or stay compounded in your investment account.
Why Loans on Watches is the Better Option
Instead of selling and triggering a tax event, many collectors are turning to loans on watches. By borrowing against your timepiece, you can access liquidity without giving up ownership or dealing with capital gains tax. The watch remains yours. The value keeps appreciating. And the money you unlock can be used for anything from a business venture to buying another collectible.
How the Wealthy Use The Asset-Backed Loan Strategy
For the world’s wealthiest individuals, borrowing against assets isn’t just a clever financial move; it’s a lifestyle enabler. Instead of selling assets and paying hefty capital gains taxes, they tap into the value of those assets through strategic borrowing. It’s how they unlock cash and fund opportunities while still allowing their portfolios to grow in the background.
Elon Musk: The Billionaire Blueprint
Take Elon Musk as an example. In 2022, he famously secured a $12.5 billion loan backed by Tesla shares to help finance his acquisition of Twitter. That wasn’t a one-off tactic. SEC filings show Musk had over half a billion dollars in loans secured by his stock as far back as 2020. By leveraging his equity instead of selling it, he kept exposure to Tesla’s upside. Yet, he gained the liquidity he needed at far lower cost and without triggering capital gains tax.
Real Estate Moguls: Using Property to Fund More Property
Real estate giants play the same game, only with buildings instead of stock. When a billionaire developer needs cash, they don’t liquidate holdings. They refinance. Be it an apartment block or a Manhattan townhouse, these assets are often used as collateral for nine-figure lines of credit.
Hedge fund manager Alan Howard bought a $59 million home in New York. Then he took out a $30 million mortgage just two months later. It’s not about needing money; it’s about using smart debt to keep capital in motion. Another well-known example is a billionaire who financed a $238 million Park Avenue penthouse purchase without selling a single existing asset. These property-backed loans let them fund new projects, settle tax bills, or make large purchases. All the while, their real estate continues to appreciate in value.
Watches, Art, and Collectibles: Hidden Value, Unlocked
Luxury assets aren’t just for display. More collectors are turning to lenders that accept rare watches. Rolex Daytonas, Patek Philippe Nautiluses, and Audemars Piguet Royal Oaks can serve as collateral for six- and seven-figure loans. This type of collateral lending is booming because it gives collectors access to liquidity without saying goodbye to the piece.
Lenders like Ameta now offer loans as high as 7 figures backed by fine watches. Are you a collector with a $3 million Patek collection? That might mean unlocking $2 million in immediate cash for a business investment, a luxury car, or even another watch. Then you can reclaim your timepieces after repayment. The watches stay in secure storage, continue to gain value, and are never listed on the open market. It’s a discreet, strategic way to use wealth without losing it.
Everyday Examples of Extraordinary Strategy
Imagine a tech CEO sitting on $100 million in company stock. Instead of cashing out (and paying millions in taxes), he borrows against it to fund a new vacation home. Then he pays interest only, whilst the stock continues to appreciate.
Or a real estate tycoon with a $500 million property portfolio. She arranges a $250 million credit line backed by her buildings to finance a luxury development and fund her lifestyle. And she achieves all that without selling a single square foot.
Or the watch collector who pledges part of their collection to fund a dream car. They get their watches back once the loan is repaid. No sale. No tax. No disruption to their investment strategy.
Conclusion
Borrowing against assets isn’t just a workaround. It’s a proven wealth strategy backed by numbers. Selling a luxury watch, stock, or property could cost you up to 37% in capital gains taxes. But a loan backed by that same asset? No taxable event, no sale, and you still benefit from future appreciation.
This is how the wealthy build and preserve empires. They don’t sell; they leverage. They stay invested while unlocking the liquidity they need to live, invest, and grow. Is it a seven-figure loan against Tesla shares, a refinanced mansion, or Richard Mille funding a new business? The formula stays the same; keep the asset, use the value. It’s legal, it’s efficient, and it’s one of the smartest ways to turn wealth into freedom.