Elon Musk is the world’s richest man, on track to become the first-ever trillionaire (or may already be one), but he’s done one thing most average Americans have to do: take out a mortgage. 

The Tesla CEO has taken out several mega mortgages, including $61 million from Morgan Stanley, on five properties in California, according to the Los Angeles Times. That’s barely a drop in the bucket of his now-$703 billion net worth, so it could be difficult to understand why he’d borrow tens of millions of dollars to buy real estate. 

But financial experts say taking out a mortgage—even when you could easily pay cash—can actually be a smart wealth strategy.

Why wealthy buyers still take out mortgages

One of the main reasons is that most of the wealth held by UHNW people is tied up in investments, stocks, and bonds, and they don’t keep as much liquid cash on hand. 

“Ultrahigh-net-worth individuals think differently about liquidity and leverage,” Miltiadis Kastanis, executive director of sales at Compass, told Fortune. “They’d rather keep their money working for them in investments, businesses—or even art—rather than tying it all up in one property.”

Meta CEO Mark Zuckerberg, the world’s seventh-richest man, has also used mortgages to his advantage. In 2012, Zuckerberg refinanced his Palo Alto home with a 30-year, 1.05% adjustable-rate mortgage, according to CNBC. With such a low rate, the mortgage cost him practically nothing, so it didn’t make sense to have nearly $6 million tied up in a home. Plus, borrowing during the era of ultralow interest rates in the 2010s was especially attractive. Many wealthy buyers locked in mortgages at a much lower rate than today’s.

“If they believe their investments will yield a greater return than the interest they’re paying on a mortgage, it makes more sense to finance the property,” Kastanis added. “It’s less about the cost of the loan itself and more about optimizing where their money is placed.”

Mortgage interest can also be tax deductible on loans up to $750,000 for those who itemize when filing their taxes. While Zuckerberg’s mortgage was more than that, he can likely deduct at least part of his mortgage interest, which further reduces borrowing costs. 

“Mortgages also allow for tax optimization in some jurisdictions, as interest payments may be deductible,” Islay Robinson, founder and CEO of mortgage brokerage Enness Global, told Fortune. “And in high-inflation environments, the value of money erodes over time, making it advantageous to borrow now and repay later.”

Celebrities use the same strategy

Many celebrities and wealthy buyers take the same approach.

Take Paris Hilton, who took out a mortgage on the $63 million mansion she bought from Mark Wahlberg in Beverly Hills. Hilton is estimated to be worth between $300 million and $400 million. 

What’s even more interesting is that she and her husband, Carter Reum, reportedly took out the loan after they had already bought the 12-bed, 20-bath home, which shows a $43.75 million mortgage with JPMorgan Chase at an interest rate of 5.25%.

“It surprises many people, but it’s actually quite common for the mega-wealthy to take out mortgages—even when they could write a check for the full purchase price,” Evan Harlow, real estate agent at Maui Elite Property, previously told Fortune. 

Tax and inflation advantages of taking out a mortgage

Another reason ultrawealthy buyers borrow rather than pay cash is that they often take out loans backed by their investment portfolios. Known as securities-based lending, these loans allow clients to borrow against stocks or other assets without selling them and triggering capital gains taxes. Large banks often promote these types of loans to wealthy clients.

“Rather than selling your public market investments to raise money, borrowing against your assets can allow you to stay the course on your investments, defer taxes, and free up money for other opportunities,” according to J.P. Morgan. “It’s a way to tap into the value of what you own while keeping your financial plans intact.”

Because borrowed money is not treated as taxable income under U.S. law, wealthy individuals can finance spending by taking loans against their assets without triggering income taxes. Analysts often describe the practice as “buy, borrow, die”: accumulate appreciating investments, borrow against them to fund consumption, and ultimately pass those assets to heirs with a stepped-up basis that largely eliminates the accumulated capital gains tax.

What everyday buyers can learn

For billionaires and everyday buyers alike, the decision ultimately comes down to how they want their money working. Is it better to lock it into a house—or invest elsewhere?

“The takeaway for the average buyer isn’t to mimic their precise approach, but to understand the principle,” Harlow said. “Sometimes the smartest financial move isn’t paying everything off, but keeping your money flexible and working for you.”

A version of this story was originally published on Fortune.com on March 9, 2026.

More on luxury housing:

ABOARD AIR FORCE ONE (AP) — President Donald Trump said Friday that he wants his new acting director of national intelligence, Bill Pulte, to cut the office, which has already been significantly scaled back during his second term.

WATCH: Trump says Pulte isn’t ‘permanent’ pick for national intelligence chief after GOP pushback

Trump noted that the size of the office has been “way too high for way too long” and that “if he cut, I wouldn’t mind that.”

“He’ll do a very good job,” Trump told reporters on Air Force One as he traveled to Wisconsin for an event on agriculture. “He’ll watch it closely, but Bill Pulte is very good, he’s very talented.”

The Republican president said in an earlier interview with The Wall Street Journal that he has asked Pulte to start the process of firing employees. In the interview, Trump said he has already conveyed his view to Pulte, who has served as head of the Federal Housing Finance Agency but has no apparent national security expertise.

“I’d like to see it smaller. I think there are a lot of people in there that shouldn’t be there,” Trump said, which the Journal said was in reference to intelligence community officials who had served in the Democratic administrations of Presidents Joe Biden and Barack Obama.

Trump told the Journal that he wants Pulte to “start the process” of firing personnel and that the eventual permanent director of national intelligence should continue it. The president has indicated that he would not formally nominate Pulte for the position.

“Frankly, it might be good for him to shake it up before people come,” Trump said. “Because, if he (Pulte) reduced the size, in conjunction with me … and in conjunction with possibly the person coming in … he can do a lot of the hard work and we wouldn’t have to saddle somebody that goes in.”

Pulte was tapped by the president earlier this week in a surprising move that has been met with bipartisan resistance in the Senate, which confirms presidential nominations. The temporary appointment has now snarled the renewal of a critical national security surveillance program on Capitol Hill, with Democrats key to the vote pointing out that they did not trust Pulte — whose office oversees 18 intelligence agencies — to help administer the surveillance program.

Trump told reporters on Air Force One that Pulte will stay in the position depending on how long it takes to get his successor confirmed. The president also said he was considering five people who were “all very good, all people that you know very well, all people that do that kind of thing.”

“They’re very respected people,” Trump said of his intelligence candidates, without naming them.

Under Pulte’s predecessor, Tulsi Gabbard, the DNI office had already taken steps to scale back its size. In August, the Trump administration said that the office’s budget would be cut by more than $700 million per year, while slashing the size of its workforce.

At the time, Gabbard said the office had become “bloated and inefficient” while she announced the roughly 40% workforce reduction.

Gabbard resigned last month after revealing her husband’s cancer diagnosis.

Kim reported from Washington.

Campaigners have called for radical reform and a public inquiry into all royal finances after revelations that Andrew Mountbatten-Windsor received an undisclosed private income from subletting three cottages on his Royal Lodge estate while paying a “peppercorn rent”.

A report from the public spending watchdog, the National Audit Office (NAO), found the rental income went to the former Duke of York, but said: “We do not know what rent was charged.”

It was published on Friday as part of a public accounts committee inquiry set up after a public outcry over revelations that the former prince was paying a peppercorn rent (a small token payment) on the Royal Lodge estate in Windsor before he was evicted to Marsh Farm in Norfolk by the king.

The anti-monarchy campaign group Republic and the former Liberal Democrat minister Norman Baker said they would be pressing the public accounts committee for a full investigation.

Republic called the subletting a “flagrant abuse of public property” and said that while serious concerns remained about the former duke’s use of publicly owned property, the whole family was “benefiting from a multimillion-pound public housing scheme”.

The report also revealed that Mountbatten-Windsor’s daughters, the princesses Beatrice and Eugenie, who do not perform royal duties, live in royal palaces with their rent paid privately by King Charles, and adjusted, or discounted, owing to tenants having to be security vetted.

Graham Smith, the chief executive of Republic, said: “The crown estate and royal palace property portfolio is state property. It should all be used for the benefit of the public, not the private enrichment of the royals.”

He added: “MPs need to seize this moment to push for radical reform, including removing all royals but the monarch from publicly owned accommodation.”

Baker called for an investigation into “all royal finances, not just Andrew’s”, adding: “I am happy to open this can of worms.”

Margaret Hodge, who previously led the public accounts committee, told BBC Radio 4’s Today programme she was “very concerned” that the NAO was not able to find out how much money the former prince had made from letting properties.

Two organisations, the crown estate and the royal household, provide properties to members of the royal family.

The crown estate, a £15 bn portfolio of land and property, is held by the monarch “in right of the crown” but is not their private property. It runs as an independent business with profits paid directly to the Treasury.

A proportion its profits, known as the sovereign grant, is handed to the royal family to support their official duties in exchange for the monarch’s surrender of the revenue from the crown estate and is to be reviewed this year. The crown estate is required to achieve the best price when letting or selling properties, including those let to members of the royal family.

Mountbatten-Windsor was entitled to rent out the cottages under his long lease for which he paid a £1m premium and £7.5m in renovations in 2003, and a peppercorn rent thereafter.

Subletting provisions are a feature of certain long-lease structures granted by the crown estate but are not automatic, and are explicitly documented in each lease agreement. Most of the crown estate’s residential properties are on long leases, the NAO said.

Sources suggested Mountbatten-Windsor’s subletting did not generate profit, and rent was set at a rate to cover only maintenance and running costs for staff living there. But no further details have been made public.

Baker said the former prince could have been getting £30,000 a year for each of the three cottages before surrendering the lease.

“And if that figure is wrong, they have to come forward and say what he got. So I challenge him to come forward and tell us what he got,” added Baker, the author of Royal Mint, National Debt: The Shocking Truth About the Royal’s Finances.

“But it’s not just Andrew. It’s the whole gamut. We have Edward leasing out his stable block. Then there is William and the duchy of Cornwall,” he said, referring to recent reports that the duchy, which provides the future king’s private income, is poised to make millions charging the Ministry of Justice for leasing the abandoned Dartmoor prison.

Dr Craig Prescott, a specialist in UK constitutional law at Royal Holloway, University of London, said from a property law perspective it was perfectly normal to get a lease on an estate and then sublet different parts of it. However, when it came to royalty, perception was key.

“The perception is of people living in massive palaces or properties, and the concern is that they’re getting a very good deal or, worse, making money from it,” Prescott said.

The fact it was a crown estate property led to “more scrutiny” because its profits go to the Treasury, he said, adding that Mountbatten-Windsor had paid £7.5m upfront at the start of his lease.

The royal household manages and maintains the land and buildings in the occupied royal palaces estate through the sovereign grant. The occupied palaces are not owned by the monarch, but held “in the right of the crown” in trust for the nation, and include official residences such as Buckingham Palace, Windsor Castle, St James’s Palace, Clarence House and Kensington Palace.

The royal household generates rental income to help support the monarch in official duties by charging for residential properties within the occupied royal palaces estate, which amounted to £3.6m in 2024-25. As of May 2026, the royal household had 255 properties available for use within the occupied palaces.

Before 2011, the Department for Culture, Media and Sport was accountable to parliament for their upkeep, and delegated responsibility to the royal household in return for an annual grant.

Under David Cameron, the Sovereign Grant Act removed the responsibility of the secretary of state so that in future the properties would be maintained by the monarch out of the grant.

Prescott said: “The problem is essentially of perception here. That all this is so complicated and difficult to explain and understand; what is public and what is private is really quite a complex question at times. The reality is hidden behind all this complexity and that doesn’t help for public understanding.”