While I agree, there's something that feels unfair about double taxation.
Here's an idea:
- Capital gains become taxable when you borrow against an asset, proportionate to the amount borrowed.
- The gains which have already been taxed are added to the asset's cost basis, so they're not taxed again on sale (basically same as sell and rebuy).
If the shares subsequently tank, you can carry forward the loss against future gains on the same asset, but can't claim a refund or offset unrelated gains (to avoid incentives to transfer value to a different company and dodge liability, etc.)
For example:
2000: I buy $1M of S&P 500 ETFs.
2026: They're worth $8.5M ($7.5M gain). I borrow $2M against them, effectively realising ~24% of the gains (~$1.75M), and pay CGT on that amount. My cost basis increases to $2.75M.
2030: I sell up for $10M. Instead of paying CGT on $9M of gains, I pay it on ~$7.25M, since the rest was already taxed.
Here's an idea:
- Capital gains become taxable when you borrow against an asset, proportionate to the amount borrowed. - The gains which have already been taxed are added to the asset's cost basis, so they're not taxed again on sale (basically same as sell and rebuy).
If the shares subsequently tank, you can carry forward the loss against future gains on the same asset, but can't claim a refund or offset unrelated gains (to avoid incentives to transfer value to a different company and dodge liability, etc.)
For example:
2000: I buy $1M of S&P 500 ETFs.
2026: They're worth $8.5M ($7.5M gain). I borrow $2M against them, effectively realising ~24% of the gains (~$1.75M), and pay CGT on that amount. My cost basis increases to $2.75M.
2030: I sell up for $10M. Instead of paying CGT on $9M of gains, I pay it on ~$7.25M, since the rest was already taxed.