What $6 million buys... in taxes

Frequent commenter Better Village emails to point out an Interesting item at NYTimes.com explaining what $6 million will buy you in three different real estate markets. You've seen items like this before: In Naples, Fla., $6 million buys you a gated, Mediterranean-style, 9,200-square foot estate; In Telluride, Colo., it buys you a 4,300-square foot lodge; and in Los Angeles, it buys you a modern, 6,000-square foot, 4-bedroom house (pictured at left) with sweeping views. You can argue all day long about which home is worth more and where you'd rather live.

Here's the part Better Village notes: property taxes.
--Taxes on a $6 million home in Naples: $29,332 a year.
--Taxes on a $6 million home in Telluride: $8,198 a year.
--Taxes on a $6 million home in LA: (wait for it... wait for it...) $74,937 a year.

That is a big difference.

Thoughts? Insights? Email story tips to peter.viles@latimes.com.
Photo Credit: Jeffrey Hobgood Real Estate.

Comments

[tew]

I think if you look at Montana or New Jersey or Texas then LA will look downright cheap. Check it out.

Also, Prop. 13 creates a very unequal distribution of property taxes based on date of purchase (or when your parents or their parents purchased).

[shireen]

Well, in my part of Texas annual taxes would be somewhere north of 120,000 for a 6 million dollar home. I pay the same amount on my home valued less than 400K as the they do for a 6 million dollar home in Telluride!

(And assesed -- and raised --annually)

[tom borland]

the 30k for florida is way out of whack based on my experience. My house in Jacksonville that was just appraised at $235,000 by the tax collector resulted in a bill of $3800 for the year, or 1.6 % of value, slightly higher than the oft cited CA rate of about 1.25%. Not to mention that my taxes went up $800 this year. This is one of the reasons why there is such a cry in for property tax reform in Florida right now.

[kathleen fairweather]

Bravo Better Village for pointing out the hidden costs. Maybe HGTV can do a show on "What You Get For Your Property Taxes". I owned a $400k home in Hawaii (yeah, yeah - shouldna sold it) and my property taxes were only $800 per year - that was 2003. And Hawaii reduces them 25%-30% when a homeowner hits 60.

I've also lived in Little Rock where I had a home near the Governors Mansion that I Paid 385k for - and my property taxes were only $800/yr - granted it was in the Historic District and would've been double if not.

California property taxes are insane unless you bought pre-1990.

Of course, anyone who can afford 10M + wouldn't think of property taxes as anything else but a huge write off.

[l.a. guy]

And on top of that as a resident of California you get to live in the state with the highest income taxes in the country. (9% at the top end)

Whoo hoo, we're number one!

[Susan]

None of those tax rates are high enough for folks who can afford a $6 million home.

[Omar]

I concur with the two Texas comments. I own a townhome in Texas that's assessed at 80k. Property taxes on it are just over 1700/year. That's about a 2% tax rate. My taxes have gone up every year since 2002 when I purchased the home. When I purchased, my taxes were 1400/year.

[Another]

Texas, Harris county = 3.35% annually (other sections higher at a little over 4%)

$6,000,000 house = $201,000 taxes every year, regardless of income.

TX is good tax-wise if your salary is high and you own a mid/higher end home, ~$400k, but no good if retired. The property taxes will eat your retirement income alive.

[Martin]

Where is Howard Jarvis when we need him? Oh, that's right. He went to that great soap box in the sky.*

*And for those of you don't know who Calif. Sen. Howard Jarvis is, you're (1) under age 35 and (2) you can Google his name and realize he led in California the greatest tax revolt in modern times.

[Dodgerdog]

The Florida numbers seem low. Perhaps they are calculated on the previous owner of that house's payments (and hence a low assessed value). Or maybe that is just the tax based on city millage rates.

I Lived in Florida 5 years and never saw any city with total combined property taxes much under 2%. And many counties are at close to 2.5%. 2% equates to $120K a year on that house.

When we moved to California our property taxes dropped by about 1/3 on a house that had a slightly higher ($40k) appraised value.

[Horizontal Translation]

Anyone know of a place where there are no property taxes (Monaco?)

[Rob]

Now thats a funny story, thanks for the laugh..

[Horizontal Translation]

Here's what property taxes (and some other goodies) look like nationwide as of 2006. Keep in mind that much of this is based on assessor's value, which is a far cry from market values. I've heard tell of people who purchased homes in the early 70's, whose current market value is in the millions, assessed value in the 10's of thousands, and annual propert taxes under $1,000 a year. Let's keep it that way lest the boomers and old timers get swept out of their homes as well - homes they've kept for decades while resisting the flipomania.

http://tinyurl.com/2hs9ol

[waitingforthepain]

>>Of course, anyone who can afford 10M + wouldn't think of property taxes as anything else but a huge write off.<<

You are sadly mistaken Kathleen. I fall into this camp and completely adhore paying high taxes or paying big bucks for anything!

How do you think I came to be wealthy in the first place? Certainly not by being frivolous or reckless with my funds.

[longcat]

No way are property taxes 3.35% in harris county. I live there and my taxes this year (not including homestead exemptions...etc) were in the 2.25% range, and including exemptions were around 1.9%

[toby]

LOL comparing Telluride CO with what? 7,000 population that is 4 hours away from civilization, 7 hours away from Denver, to LA which has almost 4 million proper and close to 12 million metro (OC, Inland and Coast, and BTW some say 15 million Metro)...

Is specious at best.

Property tax is mostly based on the cost of infrastructure of that cities, town, county (Schools, cops, fireman, roads blah blah, blah).

So comparing one of the largest cities in the world to a town with around 7,000 people that is LITERALLY in the middle of nowhere.

It's a 4 hour drive from the closet airport.

How many airports does LA metro have?

[Michael T]

My Harris County (metro Houston) property taxes are about 1.9% of the market value. I would much rather not pay state income tax and yes my house is only about 1.7x my income, what a shock. Property taxes are a much better and stable source of tax revenue, from a public policy perspective. Look what Proposition 13 did to California and its reliance on sales tax and income tax, last recession. Remember, California's long term bond ratings fell to the second lowest in the nation last recession (thank you Louisiana).

[Another]

Don't know about metro Houston, but the Clear Lake area of Harris County is taxed from three entities, Harris county, Galveston county and Clear Lake Schools, minimum of 3.35% for the lot. I lumped it all together under Harris county. I should have spread the credit around.

Friendswood and the newer developments in League city have an additional MUD tax. Their taxes are in excess of 4%.

[l.a. guy]

"Of course, anyone who can afford 10M + wouldn't think of property taxes as anything else but a huge write off."

Not likely, most people who can afford those prices also get hit by the AMT which effectively neutralizes the write off. (And yes I'm bitter)

[Brady Westwater]

Property taxes are lower in California than almost anywhere. Those low taxes have to be from assessments based on what the sellers paid and do not in any way reflect what the new owner would be paying.

[Melanie]

Really miss CA property and state income taxes actually (good ol' Prop 13). Sold a home in South Orange County near the beach for 700K in 2006--prop taxes were about $2200 per year. Bought a home 3x the size in NC for $575K and prop taxes are 3x as much. Also self-employed and state income tax bill is 3x as much as CA for the same income. Property taxes in CA are a good deal.