Bay Area Estate And Tax Planning Law Firm

Overpay for house? Then pay $600,000 in property taxes.

On Behalf of | Jul 7, 2012 | Uncategorized |

Perhaps if you pay $100 million for your house or estate in Silicon Valley, it doesn’t matter to you if you overpaid. According to a real estate assessor, a Russian billionaire paid way too much for his California purchase. The real estate taxes for the property used to be about $300,000 per year but the new owner will pay nearly twice that according to estimates.

Due to a fluctuating real estate market, some homeowners may choose tax litigation to dispute a tax obligation. In this particular case, the homeowner has not even moved in yet. How much he paid for the property may not be an issue if he wanted it badly enough.

The property sold for about $100 million, although the assessor had a hard time get a valid comparable listing or “comp” as they say in the real estate business. The most expensive home prior to this purchase was the 56,500-square foot Holmby Hills Spelling Manor that sold for $85 million.

If the assessor accepted the sale price as the assessed value, the new owner would owe about $1.2 million in property taxes per year. Instead, he was given a deal at an assessed value of about half that and just $600,000 in taxes owed.

When it comes to taxes, many things are set in stone: you must file, you must pay what you owe, and you may not lie. Other things however, are more flexible: you can negotiate with the Internal Revenue Service, you can work out payment plans, and you can appeal a decision.

In this particular case, one would assume that the Russian mogul thought the property worth the price.

Source: Forbes, “Billionaire Yuri Milner ‘Overpaid’ On $100 Million Mansion By 100%, According To Assessor,” Morgan Brennan, July 5, 2012