ADVANCED STRATEGIES • STEP 1 OF 4
Get Ready: Borrow Against Assets
The rich never sell — they borrow against their assets.
— Traditional Wealth Wisdom
Learn how to access liquidity without triggering CGT by using your investments as collateral.
Your Learning Journey
Your Learning Journey
This Step Takes: 15 minutes
Understand the "borrow, don't sell" strategy, learn about different collateral loan types, and discover the tax benefits.
Why This Matters
Wealthy investors use collateral-based loans to access liquidity without triggering CGT. This strategy allows you to keep your appreciating assets while still accessing cash for opportunities or expenses.
The Core Concept: Borrow, Don't Sell
Instead of selling appreciating assets (which triggers CGT), you borrow against them as collateral to access liquidity tax-free.
Traditional Approach: SELL
- ❌Triggers Capital Gains Tax (CGT)
- ❌Lose future upside potential
- ❌Permanent loss of ownership
- ❌Miss out if asset doubles/triples
Smart Approach: BORROW
- ✅No CGT triggered (loan proceeds aren't taxable)
- ✅Keep 100% future upside
- ✅Still own the asset
- ✅Interest may be tax-deductible
The Trade-Off
While borrowing avoids CGT and keeps your assets working for you, it's not free:
- • You pay interest on the loan (typically 5-15% APR depending on asset type)
- • You face liquidation risk if collateral value drops significantly
- • You need to monitor your loan-to-value ratio
This strategy works best when you believe the asset will appreciate more than the interest cost — which is often the case with high-conviction long-term holdings.
Types of Collateral Loans
Different assets support different types of loans. Here's what's available for Australian investors.
Crypto Loans
Borrow against Bitcoin, Ethereum, or other crypto. Providers: Ledn, Nexo, BlockFi. LTV: 25-50%. Interest: 8-15% APR.
Gold/Silver Loans
Borrow against vaulted precious metals. Providers: Perth Mint, ABC Bullion. LTV: 50-70%. Interest: 5-10% APR.
Margin Loans (Stocks)
Borrow against ASX/US stocks. Providers: CommSec, NAB, ANZ. LTV: 50-70%. Interest: 6-10% APR (often Prime + margin).
Home Equity Loans (HELOC)
Borrow against property equity. Providers: All major AU banks. LTV: Up to 80% (including existing mortgage). Interest: 5-7% APR.
LTV = Loan-to-Value Ratio
LTV is the percentage of your asset's value you can borrow.
Example: If you own $100,000 of Bitcoin and the lender offers 50% LTV, you can borrow up to $50,000. If Bitcoin drops significantly and your LTV exceeds the lender's threshold (e.g., 70%), they may liquidate your collateral to recover the loan.
Australian Tax Treatment
The tax benefits of borrowing vs selling are significant — but with important conditions.
1. Loan Proceeds: NOT Taxable Income
Money you borrow is not considered taxable income by the ATO. This is the core benefit — you get cash without a CGT event.
2. Interest Payments: May Be Tax-Deductible
Interest is tax-deductible if the loan is used for income-producing purposes:
- • ✅ Deductible: Borrow against BTC to buy stocks/investment property
- • ✅ Deductible: Borrow against property to buy more investments
- • ❌ NOT deductible: Borrow for personal expenses (house deposit, holiday)
3. Collateral Liquidation: CGT Applies
If your lender liquidates your collateral (due to a margin call), this is treated as a sale — meaning CGT applies. This is why conservative LTV ratios and active monitoring are critical.
Always Consult a Tax Professional
When to Use This Strategy
Borrowing against assets isn't always the right move. Here's when it makes sense.
✅ Best Use Cases
- •Strong conviction: You believe asset will appreciate >15% annually
- •Tax optimization: Avoid CGT now, especially if expecting lower tax bracket later
- •Bridge liquidity: Need cash temporarily while waiting for other funds
- •Wealth acceleration: Borrow to buy more appreciating assets (leverage)
❌ Avoid If...
- •High volatility + high LTV: Risk of liquidation too great
- •Non-productive use: Borrowing for expenses with no deduction benefit
- •Asset expected to fall: Better to sell now and redeploy capital
- •Can't monitor regularly: Requires active management of LTV ratios
The Golden Rule
You're Ready!
You now understand:
- Why borrowing against assets avoids CGT (loans aren't taxable income)
- The four main types of collateral loans available in Australia
- How Australian tax rules treat loan proceeds and interest payments
- When this strategy makes sense vs when to avoid it
Borrow Strategy - Get Ready: Complete
- Borrowing against assets lets you access liquidity without selling—no CGT, no loss of future upside.
- Four main types of collateral loans in Australia: crypto, gold/silver, margin (stocks), and home equity.
- Interest may be tax-deductible if used to generate assessable income (consult your accountant).
Homework
Which of your current assets could you borrow against if you needed liquidity? What would you use the borrowed funds for?
Calculate your total borrowable equity across all asset classes. If you have $100k in Bitcoin, $50k in stocks, and $200k home equity, you could access ~$150k in loans without selling anything.
What's Next?
15 minutes