What are the tax benefits of buying real estate in California versus Nevada taxes in Lake Tahoe?
This has to be the most popular question that's asked of us when buyers are looking at buying a home in Lake Tahoe.
First off, buying any property is a personal choice. There are a lot of factors that goes into choosing a property such as the location, the property itself, and the price.
For others, it's about the tax benefits. Let's look at some of the benefits of buying real estates in California versus Nevada taxes in Lake Tahoe.
California tax benefits:
- Property taxes are 1.25% of the purchase price
- Proposition 13 caps property tax to increase to 2% of it's appreciation per year
- There are only three incidences that a property may be reassessed: sale of a property, when a permit is issued for improvements on a property, and when ownership is changed
Nevada tax benefits:
- For owner-occupied single family residence: the property tax bill is capped at an increase of 3%. Excluded from the cap is any increase in the assessed valuation of the property intended to be occupied by one family with facilities for living, sleeping, cooking and eating.
- For rental properties: the 3% cap also applies if the rent charged does not exceed the fair market rent. Excluded from he cap is any increase in the assessed valuation of the property from the prior year which is due to any improvement or change in the actual or authorized use of the property.
- For second home owners: the average percentage change in the assessed value of a county over the current year plus the previous nine years or 8% whichever is less, and then compare the value to twice the increase in the CPI for the previous calendar year. After comparison, the higher percentage between the two is the percentage limit on the increase in property taxes over the previous year.
- How property taxes are calculated: multiply the assessed valuation by the tax rate (see below)
Taxable value x 35% = assessed value x tax rate = property taxes due
example: Taxable Value $100,000 x 35%
Assessed Value $ 35,000 x .0298
Property Tax Due $1,043.00
- Other benefits include: no corporate income tax, no personal state income tax, no franchise tax, no inheritance tax, no estate tax, no unitary tax, and no inventory tax.
These are some of the highlights of the benefits of buying real estate in California versus Nevada taxes in Lake Tahoe to help you understand the differences.
Understanding Nevada's Property Tax System
(We strongly advice that you discuss all tax matters with your personal attorney and/or CPA).