Filed under: Estates, Celebrity Shopping
It’s the season for worrying every last deduction you can possibly take on your taxes. As you are sweating those last minute details here’s a story to make your blood boil. The San Francisco Chronicle reports that Oracle CEO Larry Ellison will get a $3 mllion tax break because his Japanese-style home in Woodside, California is “functionally obsolete.”
Ellison’s Octopus Holdings LP purchased the 23-acre site in Might 1995 for $12 million and then sent to work on a nine year project constructing his version of Xanadu, a lavish 8,000-square-foot home based on a Japanese emperor’s 16th century estate. Ellison seems to have a taste for all things Japanese, he also bought a home in Atherton in 1987 and turned it into a Japanese-style palace with seven bedrooms, a traditional tea home, bath home, gardens, a koi pond and waterfalls on 2.8 acres. That home was quietly put on the market in 2005 for $25 million. The property website for that home is here.
According to the Chronicle, the assessor’s office based its January 2005 valuation of Elllison’s Woodside home on reproduction costs, the $166.3 million it should have cost to build the home. The construction actually cost more than $200 million. But attorney William Bennett representing Octopus Holdings argued that the property was worth only $64.7 million at that time and in the two tax years, since entitling Ellison to a $3 million rebate on taxes paid. The appeals board concurred and so the $3 million will come from San Mateo county’s property taxes paid this year. Of that $3 million it is estimated that almost $1.4 million would have gone to schools in the area .
Ellison’s home decline in value is shocking in an area that boasts very pricey real estate thanks to the Googleaires, people who made their fortune at Google and invested in huge homes locally. The reason for the dip in value is essentially that Ellison created a home that no one else would want to buy. The home is said to suffer from “significant functional obsolescence” because the Japanese architecture, elaborate landscaping and over improvements to the property have made it a home that’s expensive to maintain and has reduced value to to others.
Ellison, who has a net worth of $25 billion according to Forbes, has turned his attentions to Southern California in recent years. In 2005 he picked up five lots in Malibu’s high-priced Carbon Beach area for a reported $65 million and is stated to be looking into buying an NFL franchise for Los Angeles.
As the Chornicle article points out, perhaps the only good news out of this may come from the fact that it draws attention to the fact that homeowners can have their property values reassessed. With the declining real estate market in many regions some people might be in a situation where their property is being over-assessed but they’re not aware of it.
[Thanks to Uncle Roger and Lana for calling our attention to this one]
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