***Official Real Estate Thread***

[slipped_disc]

Currently shopping for a home. None of the decent and affordable homes that I've come across recently are covered by traditional fire insurance. They require the FAIR plan. Is anyone here on the FAIR plan for fire insurance (CA)? If so, how have rates fluctuated over the year?

 

[r32]

Los Angeles

New "Mansion Tax" law, which passed on the ballot back in November, slaps a 4% tax on homes selling for $5 million and up, and places a 5.5% tax on properties selling above $10 mil.

 

[keenfish]

Los Angeles

New "Mansion Tax" law, which passed on the ballot back in November, slaps a 4% tax on homes selling for $5 million and up, and places a 5.5% tax on properties selling above $10 mil.

Is this a one time tax on new home purchases going forward or are they going to tax me an additional 4% every year just because my house cost more than $5 mil when I bought it?

 

[r32]

Is this a one time tax on new home purchases going forward or are they going to tax me an additional 4% every year just because my house cost more than $5 mil when I bought it?

allow me to employ the bold print button for assistance.

Los Angeles

New "Mansion Tax" law, which passed on the ballot back in November, slaps a 4% tax on homes selling for $5 million and up, and places a 5.5% tax on properties selling above $10 mil.

 

[GromsDad]

Its the "Tear Down The Mansion" tax. You tear down the mansion to avoid the tax and sell it as an empty building lot with a view.

 

[Subway]

I just did a small piece of business for a high end realty brokerage (national) and this particular broker they were touting (a knockout naturally) sold 750,000,000 in 2021 alone in Miami. One agent. Not even 40. Over 2 billion in sales in the last several years. My entire company only does 2 billion a year and we’re publicly traded

hard to fathom.

 

[slipped_disc]

Los Angeles

New "Mansion Tax" law, which passed on the ballot back in November, slaps a 4% tax on homes selling for $5 million and up, and places a 5.5% tax on properties selling above $10 mil.

Considering the gains the owners would have seen over last few years alone (~21% in past five years), they would still be coming out on top by a huge margin. Seems fair.

 

[grapedrink]

Its the "Tear Down The Mansion" tax. You tear down the mansion to avoid the tax and sell it as an empty building lot with a view.

Does anyone actually do that? Sounds like a colossal waste just to save on some taxes. Lots are much tougher to sell.

 

[Chocki]

Does anyone actually do that? Sounds like a colossal waste just to save on some taxes. Lots are much tougher to sell.

It happens all the time depending on where you are. Its usually the buyers scraping the lots?

The Wasting Sickness of Jackson Funk , Jackson Hole Magazine

Botox is erasing town’s laugh lines.

jacksonholemagazine.com

 

[Sharkbiscuit]

It happens all the time depending on where you are. Its usually the buyers scraping the lots?

The Wasting Sickness of Jackson Funk , Jackson Hole Magazine

Botox is erasing town’s laugh lines.

jacksonholemagazine.com

Rich buyers buying up old legacy sh!t and tearing it down isn't what grapedrink is talking about.

You'd have to have a $4.999M property with a barn worth $1,001 and the tax would need to be different from income tax. Otherwise you'd sell it for $5,000,001 and pay 4 cents on the dollar over five million.

Same for a $9.999M property with a $1,001 barn on it. You'd pay 4% on the five million between 5-10M and pay 5 cents on the dollar over 10 million.

If it doesn't work like income tax I could see a grey area where there's no point selling a home in the $5M to $5,040,000 range.

 

[grapedrink]

It happens all the time depending on where you are. Its usually the buyers scraping the lots?

The Wasting Sickness of Jackson Funk , Jackson Hole Magazine

Botox is erasing town’s laugh lines.

jacksonholemagazine.com

Oh I know that tear downs are a thing. Question is whether it is economical to pay for a demo as a seller.

 

[Random Guy]

Around here I see a lot of tear downs that leave one wall remaining
Apparently there are big differences in taxes for a new construction vs a remodel
Or something like that
Tearing down a mansion to save taxes seems unlikely unless it was a dump that needed replacement

 

[Chocki]

Rich buyers buying up old legacy sh!t and tearing it down isn't what grapedrink is talking about.

You'd have to have a $4.999M property with a barn worth $1,001 and the tax would need to be different from income tax. Otherwise you'd sell it for $5,000,001 and pay 4 cents on the dollar over five million.

Same for a $9.999M property with a $1,001 barn on it. You'd pay 4% on the five million between 5-10M and pay 5 cents on the dollar over 10 million.

If it doesn't work like income tax I could see a grey area where there's no point selling a home in the $5M to $5,040,000 range.

I posted that just for local reference. There are places where people year down mansions to build newer bigger ones bc they can

 

[Sharkbiscuit]

I posted that just for local reference. There are places where people year down mansions to build newer bigger ones bc they can

Yeah no doubt. But you are talking about a buyer who wants a new house on a property they've purchased, not a seller demo'ing a structure to come out ahead on taxes.

What grapedrink and myself are positing is that there seems to be almost no scenario under the LA law where there's an incentive to tear down a "mansion" to decrease the tax burden that actually makes financial sense.

Even if the tax is as dumb as possible and you'd come out ahead by selling a property for $4.999 million instead of $5.04 million, just how many properties are there in LA that have a $40K structure on a $5M lot?

 

[Senor Sopa]

Yeah no doubt. But you are talking about a buyer who wants a new house on a property they've purchased, not a seller demo'ing a structure to come out ahead on taxes.

What grapedrink and myself are positing is that there seems to be almost no scenario under the LA law where there's an incentive to tear down a "mansion" to decrease the tax burden that actually makes financial sense.

Even if the tax is as dumb as possible and you'd come out ahead by selling a property for $4.999 million instead of $5.04 million, just how many properties are there in LA that have a $40K structure on a $5M lot?

The new way is to do the lot split. Take one lot, split into two. On each lot build a main house, with adjoining junior ADU. Add in two addition free standing ADU's. Voila, one lot is now 8 income generating units.

Thankfully, the people are rejecting this for the most part, leaving the cities to beg for more low-income units to magically appear.

 

[npsp]

The new way is to do the lot split. Take one lot, split into two. On each lot build a main house, with adjoining junior ADU. Add in two addition free standing ADU's. Voila, one lot is now 8 income generating units.

Thankfully, the people are rejecting this for the most part, leaving the cities to beg for more low-income units to magically appear.

Unfortunately, SF Bay area reps in Sacramento with help from goons like Lorena Gonzalez push SBs 9&10 that basically strip away any local control of land use within a mile of any public transit hub (bus stop). Developers and their paid for governor, state senators and assembly people are, in conjunction with the the state AG, using these two bills to force their development projects through completely circumventing CEQA and local established zoning regulations.

The only way to counter this is to vote out all Democratic incumbents at state and local levels.

 

[drunjk]

 

[PRCD]

Unfortunately, SF Bay area reps in Sacramento with help from goons like Lorena Gonzalez push SBs 9&10 that basically strip away any local control of land use within a mile of any public transit hub (bus stop). Developers and their paid for governor, state senators and assembly people are, in conjunction with the the state AG, using these two bills to force their development projects through completely circumventing CEQA and local established zoning regulations.

The only way to counter this is to vote out all Democratic incumbents at state and local levels.

So they're going to build a lot of dope fiend housing and other slums near bus stops, but public transportation will not improve an iota to compensate for this new population density - instead it'll be a lot of annoying and dangerous people in the way and shuffling back-and-forth with their shopping carts and debris.

 

[sdsrfr]

The new way is to do the lot split. Take one lot, split into two. On each lot build a main house, with adjoining junior ADU. Add in two addition free standing ADU's. Voila, one lot is now 8 income generating units.

Thankfully, the people are rejecting this for the most part, leaving the cities to beg for more low-income units to magically appear.

Can’t blame them for thinking folks sitting on >1100sq ft lots may be tempted by the zoning.

Nobody wants a lot the size of a postage stamp w/ zero privacy post Covid.

 

[npsp]

Can’t blame them for thinking folks sitting on >1100sq ft lots may be tempted by the zoning.

Nobody wants a lot the size of a postage stamp w/ zero privacy post Covid.

The problem is, no one is or will be building any "affordable" housing. The developers certainly wont and individuals adding ADUs to their properties are going to charge what the market will bear. The "affordable" housing requirements for big developments are laughable and can be skirted via loopholes.
The only people taking advantage of the gutting of local zoning regs. are absentee investment property owners. They are the ones ruining neighborhoods by jamming as many units as possible on a lot and then charging market rate rents. The whole thing is a joke and is nothing more than payback to developers for their campaign donations.

This is all thanks to one party rule in Sacramento.