Prop 30 Is Driving Uber-wealthy Californians to Homes on Nevada Side of Lake Tahoe

Richard Rider, Chairman, San Diego Tax Fighters Richard Rider, Chairman, San Diego Tax Fighters Leave a Comment


Often I like to point out that “California is the engine of prosperity — for the other 49 states.”  In this SACRAMENTO BEE article, we find that such prosperity starts just across the California border — on the Nevada side of Lake Tahoe — and took off starting in December of last year.

Nevada’s rejuvenated prosperity is directly related to the CA Prop 30 millionaires’ tax passed last November.  And it’s not just prosperity — it’s BIG TIME prosperity, as California moguls flee the rich-hating “Golden State.”  As one delighted Nevada real estate agent quipped, Lake Tahoe — where the billionaires are pushing out the millionaires.

A reminder — in November, California voters were delighted to stick it to the rich — raising their income taxes about 29%, and doing it retroactively to the first of the year.  That was quite a wake up call to our state’s wealthiest residents.  The increased tax revenue from 2012 rolled into Sacramento this spring, as the evil rich folks were caught flat-footed.

But now many of these successful folks will be seeking tax relief.  One of the obvious strategies is to become a legal resident of another state — ANY other state.  And few areas are more appealing than the Tahoe area of income tax free Nevada.

Of course, not all our rich will leave.  If they have businesses or real estate investment in California, moving to another state will not avoid the onerous CA 13.3% maximum state personal income tax.  But if they retire, or live off investments, or can relocate their enterprise, moving to other states (especially tax FREE states) makes great economic sense.

This is particularly true when it comes to capital gains.  CA treats all income as ordinary income — including capital gains.  The net result is that California has the second highest total capital gains tax in the world — only Denmark is worse.

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California tech moguls drive recent push for opulent homes at Tahoe
by Hudson Sangree

Published: Monday, Jul. 1, 2013 – 12:00 am
Last Modified: Monday, Jul. 1, 2013 – 9:51 am

Just under $20 million will buy you a piece of Lake Tahoe paradise with history to spare. A century-old log home once owned by reclusive billionaire Howard Hughes is on the market inCrystal Bay, Nev., for $19.5 million. The Summertide estate was built by a silver-mining mogul and later owned by an English earl.

Too rustic? How about a $43 million, four-home compound in Incline Village, Nev., a short walk down the beach from where Oracle Corp. billionaire Larry Ellison is building a mega-estate. The lakefront in Nevada, a state with no personal income tax, has become a favorite retreat for California’s high-tech titans.

“Lake Tahoe, where the billionaires are pushing out the millionaires,” quipped Chase International real estate agent Karen Bruno, who has the listing for the former Hughes estate, now owned by a wealthy retired couple. She said a developer might tear down the historic cabin and build a trophy home for a modern-day magnate.

The properties and 21 others were on Chase International’s Lake Tahoe Lakefront and Luxury Estates Tour last week. The annual invitation-only event showcases the lake’s richest real estate.

High-end sales at Tahoe staggered during the recession but have started to recover in the past half-year.

Real estate agents said the trend has been fueled by wealthy Californians decamping for Nevada in the wake of Proposition 30, a ballot measure that California voters passed in November. It raised the state income tax rate on those who make $1 million or more annually to 13.3 percent – a nearly 30 percent increase.

That pushed some – especially those who can work from home or whose children are no longer in school – to make their primary residence in Nevada, agents said. Sales of homes in the $2 million-to- $4 million range around Incline Village have been especially brisk, they said.

“If they can move here, why not?” Bruno said.

At the highest end of the market, in the rarefied world of properties worth tens of millions of dollars, Silicon Valley billionaires have been driving sales. They’ve been buying properties on the Nevada lakefront, including the opulent homes along Lakeshore Boulevard in Incline Village.

Two of those homes sold recently: one in December for $25.5 million and another in June for $15.5 million. A third Lakeshore Boulevard home is in escrow for nearly $20 million.

“Millionaires’ row has definitely turned into billionaires’ row,” said Chase’s Kerry Donovan, one of the area’s top agents.

In December, Donovan sold the Osprey Estate in Incline Village for $25.5 million. It was the highest price paid at Lake Tahoe since 2008. Osprey, an 8-acre retreat with private beach and pier, was built by the late inventor Jerome Lemelson, whose hundreds of patents included essential components of the VCR and Sony Walkman.

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