Lake Tahoe Nevada or Lake Tahoe California?
December 22, 2010
Lake Tahoe is a very unique Lake which is located on the state line that divides California and Nevada. There are advantages and disadvantages to owning real estate on either side of the state line. Linda Granger of Chase International wrote a great article explaining these differences.
California or Nevada?
As a real estate professional I am frequently asked, “Is it true that if I am going to buy a second home at Lake Tahoe, I should buy in Nevada as opposed to California? Is it really less expensive?” Of course, this question makes sense as my market area, Lake Tahoe, is both in Nevada and California. Whenever I have attempted my intensive research consisting mainly of asking this question of other agents, or friends at the gym or over a glass of wine, I usually come up feeling as ‘gray’ about the answer as I did going into the research project. It appears that everyone has ‘heard’ this or that, but no one is really sure. It is for this reason that I have decided to actually research the subject through experts, including conversations with CPA’s and attorneys that practice on both the Nevada and California sides of the lake.
Now, if you speak with a real estate agent on the Nevada side of Lake Tahoe, I guarantee that they will be able to sell you on all the financial benefits of purchasing in their marketplace as well as the fantastic amenities and the fact that the Nevada side of the lake gets less snow and more sun…they may even drop a few names of big dogs that own homes in their world. But if you speak with a real estate agent on the California side of Lake Tahoe, they will probably be able to sell you on the fact that owners on the California side of the lake have access to charming old-Tahoe towns and neighborhoods on both the North and West shores, have easy access to some of the greatest ski resorts in the country, and oh…did i mention those California girls?
Regardless, you are in the right place. Yes, I am a California girl and for me, once a Californian, always a Californian. However, the great news is that I also have real estate partners on the Nevada side of Lake Tahoe, so hopefully the information below will not be slanted and will really help you decide between California and Nevada.
Let’s start with a quick summary, and then if you would like more details on each state, click on these links for more summarized information about California Tax Benefits & Nevada Tax Benefits.
- Property taxes in NV are county specific.
- Washoe County assesses property taxes every 5 years, but currently they are several years behind in that process
- There is no personal income tax in the state of Nevada. This can be a good thing, especially for retirees from CA who can bring their retirement incomes with them if they become residents. This is the main difference. It’s like getting a 10% raise for living across the state line. Residency is considered to be a minimum of 183 days a year. Some Californians/Nevadans fudge on this and maintain homes in both states but claim NV as their primary residence and vote/register vehicles/bank etc. in NV.
- Generally, if you buy a $1,000,000 house in CA, your tax bill will be about $1000/month, while in Douglas County the property tax on a $1,000,000 house is +/- $3500 per year. Assuming an 8% annual increase in Douglas County, it will take 9 years for the Douglas County tax to equal the CA tax, and property taxes are usually just one of several considerations in the equation. The most important thing, of course, is for the client to decide what the most important factors are in his personal equation .
- In California, property tax is reassessed upon transfer at approximately 1.25% of sales price.
- In Douglas County, NV, including the Carson Valley and Tahoe’s East Shore, taxes tend to be significantly lower than in Washoe County, NV, which includes Incline Village and Reno. In recent years the Washoe County rates have become very controversial as they’ve approached those of California.
- Douglas County property tax bills cannot be calculated from the “Total Assessed Value” posted on the Assessor’s website. Among the subjective considerations are view, age of the property and Special Taxes. Sewer is the biggest component of Special Taxes – that’s generally where a property is hooked up directly to county sewer rather than being part of a General Improvement District. Those Special Taxes are billed as part of the prop tax bill. GID members pay for water, sewer and snow removal separately at roughly $135/month. The newer the improvements the higher the property tax bill. View is also a subjective element – in the case of two seemingly identical homes, the one with the better view usually has higher taxes.
- Several years ago the Nevada legislature capped annual increases at 3% for primary residence. I called the Douglas County Treasurer and confirmed that the increase for second homes and rentals (non owner occupied properties) can be up to 8% in the county.
- As a resident, there is no state income tax if you earn your money in Nevada or if you have passive income, even if it comes from California. If you are a resident of Nevada and are employed in California you will be taxed by California.
- My experience has shown me that if it is a primary home as opposed to a second home or investment home, then the tax advantages can be more substantial. If it is a second home and you already live in California than the difference is minimized UNLESS you plan to retire in that home. If this is the case, then in an attempt to protect your assets Nevada may be a better option.
- Another point to consider is that the median price of homes in Nevada is greater than that in California if you compare Incline Village (2009 median price was $915,000) to Tahoe City ($530,000) and Truckee ($538,000). So…while it may be less expensive on an annual basis, there is a cost to that…price upon entering the market.
Businesses in California vs. Nevada
A San Diego Business Law Firm created this article comparing owning a business in California or Nevada.
A limited liability company, better known as “LLC”, is a flexible business entity. It gives you the asset protection characteristics of a corporation, but with less formality. From a tax perspective, the LLC is taxed most often as a partnership. This avoids the double taxation issues that arise with a traditional corporation.
After deciding to form an LLC, the next issue is picking the state in which to do the formation. For people living in California, there is a temptation to form the entity in Nevada. Why? Well, it usually comes down to tax issues. California taxes everything including a LLC. Nevada, on the other hand, provides a much better tax situation.
So, when we ask about the merits of a California versus Nevada LLC, the answer is Nevada is the best jurisdiction to pick, right? It might appear so at first glance, but there are problems with this approach. You will often read that you can form a business entity in any state you desire. This is true, but you probably should not.
Let’s assume I live in Tahoe City, CA and have a business idea. I decide to go ahead and form a Nevada LLC. Once created, I launch my business in Tahoe City, CA. I open an office in my home. I meet with clients in the office. I take calls in Tahoe City, CA. I receive orders in Tahoe City, CA. Basically, all the business activities are taking place in Tahoe City, CA.
This is a common scenario, but problematic. Since the day-to-day activities of my business are taking place in Tahoe City, CA, California state agencies are going to view me as a California business. This means I will have to register with the Secretary of State as a foreign LLC since my entity is based in Nevada. I will also have to pay California state taxes and other fees.
The end result of all of this is that I end up paying all the fees I would have by originally forming the LLC in California. On top of that, I will also be paying all the Nevada fees. Given this scenario, the benefits of using a Nevada LLC are lost and I actually end up in a worse situation.
Most books and websites discussing the creation of business entities are painfully inadequate. Make sure you understand the complete picture before choosing where to originate your LLC or any other business entity.
CBS News put on a great video about the differences between California & Nevada when it comes to running a business. Click here to view video.
Lake Tahoe Real Estate Statistics for August 2010
September 3, 2010
August Real Estate in South Lake Tahoe
August was a much better month for the real estate market in South Lake Tahoe than July was. The number of single family homes that were reported as sold on the South Lake Tahoe mls was up from 31 sales in July to 49 sales in August. The number of homes sold was also up from August 2009 when 45 houses were sold. Although the number of houses sold was up, both the median and average sale prices were down from both last month and last year.
South Lake Tahoe Real Estate Statistics
- There were 49 single family houses that were sold on the South Lake Tahoe MLS.
- Bank owned foreclosures accounted for 16 of the sales and short sales accounted for 7.
- The median sales price of the sold homes was $289,000, down from $330,000 in July and down from $325,250 in August 2009.
- The average sales price was $355,002, down from $382,642 in July, and down from $461,591.
- The average days on the market was 128 and the median days on the market was 83.
- The average price per square foot was $207, down from $229 in July, and down from $259 in August 2009.
One of the reasons that the median sales price, average sales price, and price per square foot was down this month was the amount of bank owned properties that sold. There were 16 foreclosures sold that had an average price per square foot of only $177. The median sales price for the foreclosures was only $232,138. If you remove the foreclosures from the statistics, the average price per square foot jumps up to $222, the median sales price goes up to $334,900, and the average sales price goes up to $368,967. As you can see, the foreclosures continue to hurt the housing prices in Lake Tahoe.
The Tahoe Keys area had 6 homes that were sold in August. One of the houses sold in the Keys was a bank owned foreclosure, and one was a short sale. The foreclosure in the Tahoe Keys that sold was 1276 White Sands. This was a 5 bedroom, 3.5 bath, 3206 square foot home listed at $1,127,900. This house sold well above asking price at $1,225,000. Many of the foreclosed properties that are priced well are receiving multiple offers and selling over the list price. The average price per square foot for the sold Tahoe Keys homes was $292. The Median sales price was $575,000 and the average sales price was $669,167.
Although the median sales price and the average sales price was down in August, the number of closed escrows was up. With 112 of the 527 homes that are currently listed on the South Lake Tahoe MLS in escrow, buyer activity continues to be very active. I anticipate another solid month of closings in September because of the high number of pending sales currently on the MLS.
Lake Tahoe Real Estate Statistics for June 2010
July 9, 2010
June was a great month for Real Estate in South Lake Tahoe. There were 53 single family homes that closed 
escrow in June, more than any other month so far this year. The increase in the number of home sales was partially driven by the expiration of the first time home buyer tax credit which expired on June 30. Another factor was that there were a lot of short sales that had been in escrow for a long period of time that ended up closing in June. Almost half of the homes sold last month were distress sales. There were 14 bank owned foreclosures and 12 short sales that were sold. That is a substantial increase from May when 9 foreclosures and 7 short sales were sold.
South Lake Tahoe Real Estate Statistics for June 2010
- There were 53 single family homes in South Lake Tahoe that sold in June, up from 42 sales in May.
- 26 of the sold homes were distress sales (14 foreclosures and 12 short sales).
- The median sales price of the sold homes was $319,000, down from $322,000 in May.
- The average sales price of the sold homes was $416,292, down from $462,367 in May. The average sales price in May drops down to $387,667 if the $3,525,000 lakefront Tahoe Keys home is removed from the average.
- The average days on the market was 179 and the median days on the market was 114.
- The average price per square foot was $209, down from $216 in May.
Prices for single family homes actually went up in June 2010 compared to June 2009. The median sales price was up 6% from $300,000 in 2009. The average sales price was up was up 17% from $346,317 in 2009. And the number of single family home sales was up 23% from 41 in 2009. The number of distress sales was up in 2010 as well. There were 26 distress sales in June 2010 compared to 16 in June 2009.
Distress sales continue to bring down the average and median sale prices of the homes sold in Tahoe. The foreclosures in South Lake Tahoe that sold in June had a very low average price per square foot of $157. The median sales price of the foreclosures was only $198,000, the average sales price was $255,107. The low prices of the foreclosures are reflective of the condition of the properties. Many of the foreclosures sold in June were in need of repairs. The distress sales will continue to drive down the median and average sales prices as long as they are around.
Currently there are 512 single family homes listed on the South Lake Tahoe MLS, 70 of those homes are in escrow. There are 33 bank owned foreclosures for sale in South Lake Tahoe, 9 are in escrow. There are 77 short sales listed on the MLS and 35 of them are in escrow.
New Listing in South Lake Tahoe
June 29, 2010
Just Listed on the South Lake Tahoe MLS!
1476 Glenwood Way
Completely remodeled home with an open floor plan perfect for entertaining! Recent upgrades include granite countertops, kitchen cabinets, tile bathrooms, laminate flooring, new carpet, and new interior paint. Located close to Heavenly Ski Resort, the Casino’s, and The lake, this would make a great vacation home or primary residence. This house comes furnished per inventory list including a hot tub! Make sure to take a look at the virtual tours as well!
- 1406 Square Feet
- 3 Bedrooms, 2 Bathrooms, and a 2 Car Garage
- New Double Pane Vinyl Windows
- Recently Remodeled
- Fully Furnished including a Hot Tub!
- Single Level Living
- Much More!!!
Make sure to take a look at the Virtual Tour of my new listing which was entered on the South Lake Tahoe MLS on 6/28/10. For more information or to set up an appointment to see 1476 Glenwood call South Lake Tahoe Real Estate Agent Brent Johnson today!
May South Tahoe Real Estate Stats
June 1, 2010
May was a much better month for the South Lake Tahoe real estate market than it was for the stock market! There were 42 single family homes that closed escrow in South Tahoe during the month in May 2010. This is a significant increase from the 27 homes that closed escrow in May 2009. The stock market did not fair
nearly as well!
Distress sales were once again on the decline. Distress sales only accounted for 38% (16) of the sales in May, down from 48% in April, and down from 58% in March. Foreclosures accounted for only 9 of the closed sold homes, short sales accounted for the other 7.
May South Tahoe Real Estate Statistics
- There were 42 single family homes reported as sold on the South Lake Tahoe mls in the month of May. This is up from 27 in May 2009 and down from 46 in April 2010.
- The average price of the homes sold was $462,367 (The average drops to$387,669 if I take out the lakefront Keys sale for $3,525,000) The average sales price was $386,177 in April and $355,633 in May 2009.
- The median sales price of the homes sold in May was $322,000. This is down from $329,163 in April and up from $315,000 in May 2009.
- The average price per square foot was $216. The average price per square foot was $211 in April and $222 in May 2009.
- The average days on the market was 145, down from 158 in April and down from 147 in May 2009.
- The median days on the market was 99, down from 112 in April and down from 137 in May 2009.
The distress sales that sold in May had a very low price per square foot compared to the non-distress sales. The foreclosures that sold had an average price per square foot of $165 and the short sales had an average price per square foot of $170. The price per square foot for the non-distress sales was $245.
Here are some other interesting statistics for the distress sales sold in May:
- Including the escrow period, the foreclosures had an average days on the market of 66. The sold short sales averaged 286 days!
- The foreclosures had a median days on the market of 76 days including the escrow period. The sold short sales had a median days on the market of 204!
- The average sales price of the foreclosures was $257,156. The average sales price was $479,857 for the short sales.
- The median price of the sold foreclosures was $229,900. The median sales price was $525,000 for the short sales.
There were only two lots in South Lake Tahoe that sold in May. Both lots that sold were in the North Upper Truckee area. One was a lot in the burn area that sold for $145,000 and one was a 10,511 square foot lot that sold for $95,000.
There was one condo that sold in May. This was a 2 bedroom 1.5 bath unit in the Tahoe Keys that sold for $290,000.
There was also only one multi family unit that sold in May. This was a property that had 2 houses on one lot in the Tahoe Island Drive area. These homes sold for $240,500.
The most active area of the South Lake Tahoe real estate market continues to be the single family homes. It is great to see that the percentage of short sale and foreclosure sales has continued to decline for the third consecutive month. The percentage of distress sale closings has gone down to 38% from 65% in February. This is another sign of stabilization in the housing market. I hope that it continues!
