Billionaires Flee to Tax Haven Just Across the California Border

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1:45Bloomberg Audio Studios. Podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. It is today's big take. It's one of the most read stories on the Bloomberg Terminal. It's a Bloomberg exclusive about the billionaires who are fleeing to a tax haven just across the California border. We're talking about Incline Village in Nevada. It's a haven for wealth and Silicon Valley elite, thanks to its beauty, its group of elite neighbors, most critically, no income taxes. I mean, it depends, right? It depends. Eliyahu Kamishar is Bloomberg News, California reporter.

2:26He joins us from our San Francisco Bureau. Eliyahu, good to have you back on the program. I mean, we're talking about a beautiful, beautiful part of California, Nevada. I mean, this is the Lake Tahoe area. It's just absolutely gorgeous in the winter, in the spring, in the summer, and in the fall. We're showing pictures of it on YouTube and Bloomberg Originals. We just flew over it. Yeah, we just flew over it. That's right. What's going on there in these, you know, multi, like more than$100 million price tags that we're seeing on some estates? Yeah, it's really interesting. The divide between Lake Tahoe is bisected.

3:06Half of it's California, half is Nevada. And if you go to the Nevada side, you can save a lot of money on taxes. And there's one town on the Nevada side. It's called Incline Village. And it's kind of become the trophy town. There is a strip there. It's like a billionaire's row where you have estates of Larry Ellison, Steve Jurvetson. He's an early SpaceX backer, just paid$125 million also for an estate there. And nearby Sergey Brin also bought a mansion. So there's a lot of, you know, beauty there. But really, the Nevada address is what drives a premium because you can get a mansion on the California side, but it can be half the price for the for the same property.

3:51Some realtors have told me. You mentioned some of the well-known homeowners, billionaires, wealthy investors. And all of a sudden what they're seeing increased demand for homes there. Yeah, they're seeing kind of this flood of tech wealth. Sergey Brin was the first to buy in. And there's a few things going on. One, you have a California billionaire tax that is being proposed that could be on the ballot in November. So some people are trying to get out of California before that. And then you also have this kind of mega wealth events that are happening. You have the IPOs of SpaceX, OpenAI, Anthropic.

4:31And so some people are trying to kind of leave the state before they potentially vest kind of a bunch of shares and see these kind of massive windfalls and avoid a big tax bill. There are. Go ahead. Can I just share one stat in your story? Sales volume for single family homes and Incline Village and Crystal Bay surged to roughly$232 million in the first quarter compared with about$30.6 million. So about$30 million a year earlier. A couple big purchases. I know, but still, that's a big move. It's a huge move. Something that you note, too, is that there are these areas with vibes that are known for billionaires, like Aspen Snowmass and Palm Beach, for example.

5:13What are the vibes in Incline Village? It's really interesting. If you're just driving down the town as a normal visitor, you're just going to think this is a regular mountain town. There is a budget grocery store. There's kind of dated strip malls. And most of the kind of like, there isn't the luxury of Aspen or, you know, Palm Beach or even Malibu. So it kind of looks like a regular mountain town. But then there's these estates. They're all tucked behind driveways. They're really not visible mostly to the kind of common visitor. And they are, you know, 40, 50, and now over$100 million. dollars.

5:53So there's kind of this juxtaposition there where you're kind of having like, you know, a regular old mountain town, little ski shops. There isn't Gucci or Prada stores, but there's an immense amount of wealth that is now being concentrated there. And there's a new restaurant offering raw amberjack with kumquat dashi. So, I mean, there's stuff coming in, right, to cater to the Lux crowd slowly. Yeah. So there is kind of this, this culture shift that you see happening. Yeah. There's a, there's a very nice restaurant that has, you know, a 10 course meal that, um, is kind of bringing fine dining to Incline Village.

6:34There's a private school as well. That is pretty much at capacity. Um, and the local public school has seen a long-term decline and that's because, you know, there's a lot of wealthy people moving in, um, and they want, high-tier education that you could get similar to what's in San Francisco. And then also even the nearby airport, which is located in California, has an eight-year wait list for private jet hangers. Sometimes you just got to take the chopper instead. Everyone knows they're more versatile. Listen, and then you've got the historic property that's made or in the works, I guess, being made into a luxe wellness hotel featuring a members-only entree through underground tunnels and priority access for Burning Man decompression.

7:20So they're working on it, right? And Mark Zuckerberg has long had a compound in Tahoe, but his compound's on the California side, right? His is on the California side. So you do have wealth all around like Tahoe. It is stunning. But you're seeing more and more the Nevada side become the premium destination. And that is, from what I'm hearing, is because of the tax advantages. So that's becoming the bigger play now. Hey, there's an Elon Musk connection. Did you see this? And the thing is, it's so close to California. It's basically California. Yeah, this is remarkable. Apparently he's got a cousin, co-founder of SolarCity, sparked outrage after he strung together prime lakefront properties to build a facility to play underwater hockey.

8:09Are you kidding me? Remember Tesla bought SolarCity. Yeah. Yeah. I mean, the town has the billionaires. They get to play around in this town. They can bring, with that instance, Elon Musk's cousin has bought a few properties. And he's building this kind of niche Olympic sport arena to build underwater hockey, which is kind of like water polo for hockey players underwater. So it's a fun story. Rated puck and all. Gotta love it. Eliyahu Khamisher, Bloomberg News, California reporter, joining us from her San Francisco beer. What an incredible read. Find it on the Bloomberg. This is Bloomberg Business Week.

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