Luxury Home Carrying Costs ExplainedChris Fajkos, January 26, 2019 in Agent Feature, Gray’s Crossing, Lahontan, Luxury, Martis Camp, Mountainside, Mountainside at Northstar, New Northstar, Old Greenwood, Real Estate, Resort Community, Schaffer's Mill, Stellar Collection, The Ritz-Carlton Lake Tahoe, Truckee-Tahoe, Winter in Tahoe
Luxury Home Carrying Costs Explained
If you’re on the market for a luxury home in one of our core luxury communities then there’s a few carrying costs you should be aware of. Aside from familiar HOA dues and social club memberships, here’s a few other costs to keep in mind:
Private Transfer Fee
This one time fee can range anywhere between 1% – 1.75% depending on the property and which development it’s located in. What does this fee go towards? Simply put, the funds go towards environmental and community benefits. More precisely, the funds get split up between the Truckee Donner Land Trust, Tahoe Mountain Resorts Foundation, Tahoe Mountain Resorts Environmental Fund, and Northstar Community Foundation. Each of these organizations are working tirelessly to ensure that the Truckee / Tahoe area remains a pristine and equitable place for all to live for generations to come. Traditionally the Buyer pays this fee but in certain instances both parties can agree to split it. Check with your accountant but portions of this fee may be tax deductible, especially under a 501(c)(3) status.
Better known as Community Funded Districts (CFD), these areas pay a parcel tax that goes towards public works projects and public services. When Prop 13 passed back in 1978 it limited the property tax rate and local government’s ability to raise funds based on assessed value of properties. Mello Roos came about shortly after Prop 13 to give local governments a tool to raise funding to pay for public infrastructure and services. There’s conflicting information on whether not these taxes are deductible so check with a CPA for details. Mello Ross is billed through your property tax bill (line item CFD).
Renting to offset carrying costs
If these carrying costs are a bit too much to handle then I would suggest renting out the home to cover these expenses. Even with minimal renting, most if not all of these expenses can be compensated for (and still put money in your pocket). With the rise of short term rental platforms like Airbnb and VRBO, it’s now easier than ever to obtain substantial rental revenue from a second home while maintaining the flexibility to use it yourself. National rental management companies like Evolve are offering super low commission splits of 10%, making full service property management that much more affordable.
Feel free to contact me if you’d like to chat more about carrying costs, since not all communities are subject to these fees. Don’t forget to follow me on social media, links are below my signature!
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