Buying a personal residence for $8 million or more is not primarily a real estate decision. It’s a balance sheet event that touches on portfolio construction, tax positioning, credit strategy, entity design, and estate planning simultaneously. For law firm partners, whose income tends to arrive on a less than predictable schedule, the capital required to close on a high-end home must be sourced from a liquidity system that is already under structural strain.
A home purchase at this level is qualitatively different from a $2 million or $4 million transaction. Most mainstream jumbo lenders cap loan amounts between $2 million and $5 million. Financing above $5 million typically requires a portfolio lender or private bank willing to underwrite based on total asset strength rather than standard income-to-debt ratios. At $8 million, buyers should expect:
For a partner whose annual spendable cash after taxes, capital contributions, and firm obligations may be $2.6 million to $2.8 million on a $6.2 million allocation, assembling a $2 million-plus down payment while maintaining adequate reserves is a material planning event.
At the $8 million price point, one-time acquisition costs accumulate quickly. In New York City, for example:
The Mansion Tax alone, at 2.25% for purchases between $5 million and $10 million, represents $180,000 in non-negotiable buyer closing costs. Outside of New York City, similar transfer taxes apply in jurisdictions like Connecticut (approximately 2.25% on sales above $2.5 million) and other high-value markets. Total buyer-side closing costs on an $8 million NYC purchase can easily approach $300,000 or more. These costs must be funded alongside the down payment, meaning the total capital required at closing isn’t $2 million; it’s closer to $2.3 million or more.
If the down payment is funded partly through the sale of appreciated securities, the tax cost must be modeled precisely. A partner selling $2 million in appreciated stock with a cost basis of $800,000 faces:
The total tax cost of liquidating $2 million in securities could approach $380,000–$430,000, meaning the partner may need to sell well over $2 million to net $2 million for the down payment.
Tax-loss harvesting, lot-specific identification, and the timing of sales across calendar years (particularly if income fluctuates) are all levers that a coordinated advisory team should evaluate before any shares are sold. But even when the liquidity plan has been identified, the carrying cost calculation remains. The mortgage interest deduction is permanently capped at $750,000 of acquisition indebtedness under the One Big Beautiful Bill Act “OBBBA,” which made the 2017 TCJA limitation permanent. On a $6 million mortgage (after a $2 million down payment), only a fraction of the interest is deductible. At 6.25%, annual interest of approximately $375,000 would accrue, but only the interest attributable to the first $750,000 of principal (roughly $47,000) would qualify for the federal deduction.
The SALT deduction cap, increased to $40,000 for 2025 via the OBBBA (and $40,400 for 2026), phases down for filers with MAGI above $500,000 in 2025 and $505,000 in 2026, with the cap hitting a floor of $10,000 for incomes at approximately $600,000 in 2025 and $606,333 in 2026 or higher. For a law firm partner with multi-million-dollar income, the effective SALT deduction will almost certainly be limited to $10,000, meaning the property tax on an $8 million home (which can easily run $80,000 to $150,000+ annually depending on jurisdiction) produces virtually no federal tax benefit.
The combined effect is that a significant portion of the carrying cost of a high-end home is borne entirely out of after-tax dollars, with minimal federal deduction offset. This is a meaningful shift from pre-2018 planning assumptions and must be incorporated into the liquidity model from the outset.
For a partner contemplating an $8 million home, the central design question is: How should the purchase price be funded across cash, credit, and portfolio resources in a way that preserves long-term flexibility? Even buyers with sufficient liquid assets to pay all cash, financing at this level is often a deliberate wealth management decision rather than a necessity. The calculus involves several competing considerations.
In favor of maximizing leverage:
In favor of a larger down payment or all-cash purchase:
For most partner households, the optimal answer is rarely all-cash or maximum leverage. Typically, a down payment in the 30–40% range funded from a combination of cash reserves and, in some cases, a securities-based line of credit (SBLOC), paired with a private bank mortgage structured for the specific household’s cash flow profile.
An SBLOC can serve as a powerful tool in the closing process. By borrowing against a taxable investment portfolio, a partner can fund a portion of the down payment or closing costs without liquidating appreciated securities, avoiding federal capital gains of up to 20% plus the 3.8% NIIT, which would otherwise apply at the income levels typical of equity partners. The SBLOC draw itself is not a taxable event. The partner can then repay the line over time using firm distributions, bonus tranches, or proceeds from subsequent, tax-optimized asset sales. However, the risks of SBLOCs are real and must be modeled explicitly:
An SBLOC should be structured with a defined repayment plan, not treated as permanent financing. Its value is in bridging the timing gap between what the closing requires and when cash arrives from the firm.
At the $8 million purchase level, private bank mortgage products offer structures that standard lenders do not. These may include:
Interest-only mortgages are particularly relevant for partners in their peak earning years. The lower initial payment creates breathing room for quarterly estimated taxes and firm capital calls, while the partner retains the option to accelerate principal payments when distributions exceed projections.
For partners with a home valued at $8 million or more, holding the property in a properly structured LLC can help limit personal exposure by keeping the owner’s name out of easily searchable public records, an increasingly important consideration as high-profile individuals have been targeted through basic property record searches. LLC ownership can offer several additional advantages beyond privacy:
In jurisdictions like Florida, holding a primary residence in an LLC may forfeit the homestead property tax exemption. The LLC must be properly maintained, with separate accounts, operating agreements, and compliance with state requirements, to sustain any applicable liability protection.
Combining LLC ownership with a grantor trust strategy creates a layered structure that can shift long-term appreciation outside the taxable estate while preserving day-to-day control and income tax integration. Following the purchase of the residence, a partner sells LLC membership interests to an intentionally defective grantor trust (IDGT) in exchange for a promissory note. Because the trust is a grantor trust for income tax purposes, the sale is not a taxable event. The note creates a defined cash flow stream back to the partner, and all future appreciation on the property accrues inside the trust, outside the partner’s taxable estate. The real power of this approach lies in how the LLC operating agreement and the sale terms are designed to keep the economic burden, mortgage, maintenance, property taxes, and insurance in the partner’s hands while allowing the trust to accumulate the property’s appreciation largely unencumbered. There are several mechanisms that make this work:
The net effect is a structure in which the partner retains practical control and bears the cost of ownership, while the trust captures the lion’s share of long-term appreciation without the friction of taxes or carrying costs. For an $8 million residence in a market appreciating at 3–4% annually, the value shifting to the trust can be substantial over a 10- to 15-year+ horizon.
The purchase of an $8 million home sits at the intersection of five distinct planning disciplines:
When these five disciplines are addressed independently (a mortgage broker here, a CPA there, an estate attorney later), the result is often a serviceable but fragile structure. When they are modeled as an integrated system, the purchase becomes a deliberate extension of the partner’s broader financial architecture – aligned with how partnership economics work, resilient under stress, and positioned for the long term.
At Wealthspire, this is precisely how we approach these decisions. As an independent fiduciary advisory firm compensated on assets under management rather than product distribution, our role is to coordinate across all five dimensions, building the models, stress-testing the assumptions, and working alongside the partner’s CPA and outside counsel to ensure that an $8 million home purchase strengthens the balance sheet rather than straining it. Planning a home purchase or other major liquidity event? Stress-test your liquidity, taxes, and credit strategy by contacting us.