By Tim Hunt
Will the new tax law chase wealthy Californians out?Uploaded: Sep 18, 2018
Is the limitation on state and local sales tax deductions brought about by the 2017 federal tax reform going to motivate wealthy Californians to leave the state?
Next year, when they file taxes, the impact on their checkbooks will be obvious. Will that prompt an exodus to states with no state income tax like Nevada, Florida, Texas or Washington? The same calculation is going on in the Northeast in high-tax states such as New York and New Jersey.
Here in California, given the price of housing in the Bay Area and the high wages paid in the technology and other industries, the state income tax for highest earners is 13.3 percent. Losing that deduction is causing some affluent families to think about moving.
The San Francisco Business Times devoted a major story about this trend in late August and there’s other anecdotal evidence.
One friend told me that a leading real estate broker in Blackhawk told him that seven of the 10 last sales were by families leaving the state.
And then there’s the Nevada addresses. The Business Times cited an Incline Village, NV Realtor reporting a big upturn in Californians looking for year-round homes in that exclusive area.
CalMatters Columnist Dan Walters reported this earlier this summer, “David Hutchinson, who developed the Clear Greek golf community on the Nevada side of Lake Tahoe, told the Journal, “Most of our lot sales are to buyers from California, the vast majority of whom intend to make them a permanent residence.”
Someone earning $3 million a year could move his or her personal home from San Francisco to Tahoe, Hutchinson said, and save $399,000 a year in taxes, adding, “That’s a lot of money to spend on real estate.”
The gated Clear Creek Community, which features a showcase golf course by designers Ben Crenshaw and Bill Coore, is located right off Highway 50 on the Nevada side of Spooner Summit. From there, it’s an easy run in the summer to Lake Tahoe or down into Carson City for groceries or to either side of Heavenly Valley Ski Resort.
The Clear Creek developers built the golf course prior to the financial crisis in 2008-09 and kept it operating while delaying the sale of any lots for custom homes. Home sales started in 2017 and have ramped up this year. The Nevada address, coupled with the excellent golf course and other amenities, give it a competitive advantage over wonderful Truckee private golf course communities with California zip codes for year-round residents.