How is this different from a home equity loan?

Securities-based lending uses your investment portfolio as collateral instead of your home. You don't trigger capital gains, there's no credit check, and your investments continue to grow. The downside: if your portfolio drops significantly, you may face a margin call.

The main risk is a margin call - if your portfolio value drops below a certain threshold, you'll need to add collateral or repay part of the loan. Only borrow a conservative percentage (under 50%) of your portfolio value.

What interest rates can I expect?

Rates vary by provider and loan size; some brokerages offer lower rates than others. Expect roughly the benchmark rate plus 1-3%. Interest may be tax-deductible if used for investment purposes.

When does this strategy make sense?

When you need liquidity for a large purchase but don't want to sell appreciated investments and trigger a large capital gains tax bill. Common uses: real estate down payment, business investment, or bridging a cash flow gap.

How much can I borrow?

Typically 50-70% of your portfolio value, depending on what you hold. Diversified stock portfolios get higher loan-to-value ratios than concentrated positions.

Tax Optimization

Securities-Based Lending

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advanced · $500K+

Instead of selling investments and paying 20%+ capital gains tax, borrow against your portfolio at ~7% interest.

Use the loan for large purchases (house, car, business).

Your investments keep growing while you access liquidity tax-free.

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Tax Benefit

Access liquidity without triggering capital gains

Requirements

$100,000+ in taxable brokerage account
Good loan-to-value ratio (typically 50-60%)
Comfort with debt against investments

How to Implement

1Apply for securities-based line of credit at brokerage
2Typically get 50-60% of portfolio value as credit line
3Draw funds as needed (only pay interest on what you use)
4Interest may be tax-deductible if used for investment purposes
5No credit check required

Frequently Asked Questions

Featured Providers

Interactive Brokers
Schwab
Fidelity
Ameriprise

Educational Only: This information is for educational purposes. Consult a qualified financial advisor or tax professional before implementing.

Last reviewed: April 2026

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Sources

Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits

Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.