Are California Income Taxes Affecting Your RE Business?

Lake Tahoe, a vacation spot for many and home to some of the richest in the country, has been gaining more attention lately. Once again, the amount and price of homes sold in the area have begun to increase which has invited billionaires to purchase homes instead of the usual multi-millionaires.

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This could be good or bad news for agents and brokers selling high-end homes in Californian communities. As some of the state’s richest move out, there will be an increase of their old homes on the market, making way for new magnates to move in.

But where are these billionaires coming from? The answer is California.

Many of California’s richest entrepreneurs have begun to move out to Nevada for one reason – to avoid personal state income taxes. Since the passing of Proposition 30 this past November, income tax has increased by almost 30% for those who make over $1 million a year – a tax of 13.3%.

This increase has led many to flee the state, and Nevada – a state with no personal income tax – seems to be one of their favorite places to establish primary residence. This is easier for wealthy individuals who are empty nesters rather than those with school aged children.
Whether or not these homes are purchased is a different question. With the increase of personal income tax brought on by Proposition 30, many potential out-of-state buyers may be deterred to move to California. This is especially true considering that the state now has the highest personal income tax in the nation, as well as some of the highest corporate taxes and sales taxes out of all the states.

The impact that this increase in taxes will have is still unknown, but we will surely see the effects in upcoming months. What are your thoughts?

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  • Egbert Pellington

    Can’t say I blame them for jumping ship. Taxes are crazy here in CA.