Why do Elon Musk, Mark Zuckerberg take out mortgages despite billions in wealth?

Musk, the richest man in the world having an asset value of more than $700 billion, recently got $61 million loans for five residential houses from Morgan Stanley. Zuckerberg, the seventh richest man in the world, has an adjustable rate of only 1.05% for a thirty-year loan on his house in Palo Alto.

However, the main question arises: why do billionaires continue doing so?

As per the financial experts, there are three primary reasons, including liquidity, tax efficiency, and investment returns. Billionaires prioritise keeping their money working from them in investment, rather than tying all in one property.

Many industry leaders invest in stocks, bonds, and business assets, avoiding cash. By taking a mortgage, they preserve liquidity and keep capital deployed in higher-returning investments.

The second consideration is whether investment yields are greater than the rate on the mortgage, in which case financing the home from a mathematical standpoint becomes superior to purchasing the home outright with cash.

Another aspect to consider is the tax advantage. The tax law in the United States does not tax borrowed money; hence, any loan below $750,000 attracts tax deductibility.

Moreover, they also exploit securities-based lending, borrowing against stock portfolios without selling and triggering capital gains taxes. With this strategy, billionaires enjoy access to cash while their investments continue compounding and eventually pass to heirs with a stepped-up cost basis.

This indicates that the smartest financial move is to make money work for you instead of trying it all up in a home.