As we first reported last month with respect to the sale of 2845 Broadway up on Billionaire’s Row:
Unless a major miscalculation, fat finger error or tomfoolery by San Francisco’s Assessor Recorder’s office is in play, based on the recorded transfer tax paid, the copy of the deed we received pegs the sale price of 2845 Broadway at $20 million.
A $20 million sale is just a bit below the original $65 million ask, $18.5 million (48 percent) under its last list price, roughly $32 million less than has been invested in the property to date, and nowhere near the $33 million 2840 Broadway commanded.
In terms of the buyer, while we’ve heard various yammerings, the legal entity on the deed is Broadcliff LLC with a mailing address of a wealth manager out of Dallas, Texas. We can’t yet officially confirm the individual hidden behind the LLC.
Yes, “yammerings,” as in David Sacks, CEO of Yammer. From Trulia this week:
Tech mogul David Sacks has reportedly just paid $34.5 million for 2845 Broadway Street in San Francisco, making it the most expensive home ever sold in San Francisco. Sources close to the deal, which is currently in escrow, say that Sacks and his wife Jacqueline are the proud new owners of the partially-completed home on ‘Billionaire’s Row.’
We’re also hearing buzz among local “in-the-know” brokers that the officially recorded purchase price will likely come in lower than $34.5 million, and a portion of the sale will be recorded as alternative personal property for tax reasons, but that is indeed the amount of money it took to get this home sold. We’ll know more when the official docs make their way to public records.
Once again, the sale has closed and we have reviewed the public records which pegs the recorded sale price at $20,000,000 based on the transfer tax paid to the City. Which begs the question, if the “in-the-know” sale price Truila is reporting is correct, are the “tax reasons” for under recording the sale price by $14,500,000 simply an attempt to avoid paying the City an additional $362,500 in transfer tax and reduce the Sacks’ property tax bill by $169,500 a year? And if so, is it a legitimate strategy and will the City stand for it?
UPDATE: Straight from David Sacks:
There’s no “tax tomfoolery”. You correctly reported the sale price of 2845 Broadway when you checked the public records. Trulia didn’t bother to. It’s just sloppy reporting on their part. As the publication that appears to do actual research and fact-checking, rather than just quoting unnamed sources, you should have stuck to your guns and stood by your original story.
That said, I remain a fan of your blog.
Cheers. And always, thank you for plugging in.
∙ The Massive 2845 Broadway Misses The Mark And Record Books [SocketSite]
amazing… and thank you for being the first media outlet yet to call out the brazen use of a loophole accoounting tricks that is letting this 1%-er avoid paying fair taxes. ‘Legal’ tax fraud for those that can afford it and have the lack of ethics to use it. Dispicable.
No big deal. The city can just make up the delta by charging the rest of us 10 cents for paper bags. If we overtax the job creators, they might move to more favorable tax climates and take all the jobs with them. You know – move all the factories and tech start-ups to Mauritius or Dubai.
Besides, it’s unfair for people who own homes in this part of town to pay SF property taxes when none of them even live here. Maybe they should be charged some kind of hotel tax for the 10 nights/year they actually spend here?
“Which begs the question, if the “in-the-know” sale price Truila is reporting is correct, are the “tax reasons” for under recording the sale price by $14,500,000 simply an attempt to avoid paying the City an additional $362,500 in transfer tax and reduce the Sacks’ property tax bill by $169,500 a year?”
As it’s personal and not real property, the Franchise Tax Board should be right on this. Sales tax is 9x higher than the transfer tax.
dude, bold post. You all must have attorney’s on tap… That being said, I’m definitely NOT a 1 %’er or anti taxation but i do have a really hard time getting upset about using whatever loophole you can to avoid paying an insane amount of transfer tax (and ongoing property tax) on one piece of real estate if you look at it in comparison to what most people in this city pay for property taxes or transfer tax.
It seems unfair to my eye that on a percentage basis this one piece of property is expected to pay god knows how much more in property tax than a cheaper lot/home taking up the same amount of space. That’s just me. I’m too lazy to do the math, but if they are avoiding paying $362,500 of additional transfer tax that means they paid at least $362,500 – FOR JUST TRADING one piece of real estate. Um, yah, that’s a lot of money to the city….I just can’t scream that they used whatever loophole available to keep that in check.
And yes….I’m all for taxes going up on the rich – because on a percentage basis it’s fair. This system definitely isn’t.
“The city can just make up the delta by charging the rest of us 10 cents for paper bags.”
The money for the bags doesn’t go to the city it is profit for the store.
It’s not only reducing his annual taxes on the property; but its also reducing the taxes received by the city since the original purchase price here was $32M. So the city is not only losing out on the transfer tax; its also losing out in a net reduction of its annual property tax collection to the tune of +1M over the next 10 years. The city collects $337,317.56 on this home annually on a basis of $28.8M. I disapprove, but net-net my guess is that it is better to have this home occupied and developed. Calls into question the tax basis and purchase price of the other two homes recently sold there. These guys run in a tight circle.
I propose we give the Assessor subpoena power and haul both Brokers into Court to get to the bottom of the issue.
Maybe the feds can come in and slap a 35% gift tax on the $14.5 million difference. That would learn ‘um.
There’s another cause of reduced property taxes here. This house is basically a shell and not livable. There’s millions of work left to finish the interior and will add value to the house.
There wouldn’t be any new square footage added and I don’t know whether closing out those permits will trigger a reassessment.
smells like tax fraud to me.
where is the accountability?
It’s as if a Bizarro Moses climbed up out of a hole with a set of Reverse Commandments: thou shalt covet they neighbor’s property.
If you want someone else to be taxed more than you, then so be it, but don’t think of yourself as virtuous.
There’s nothing new or modern about wanting other peoples’ money taken away from them. It’s good old fashioned greed and envy.
this kind of ‘tax strategy’ happens all of the time, especially in the ‘high end’.
what’s so complicated about paying ’20 million’ in ‘recorded’ price and disbursing another ‘14.5 million’ outside of the ‘recorded’ price
in fact, this strategy occurred just 6 months ago on another property in the same vicinity as this one
lol … but on who??
The other day I was talking with someone that said he had embezzeled hundreds of thousands of dollars and when I told him he should give it back he said no and explained: “There’s nothing new or modern about wanting other peoples’ money taken away from them. It’s good old fashioned greed and envy.”
So according to unwarrentedinlaw it would be because we are greedy and envious that we would want someone to pay the legal taxes on a true value of a piece of property they bought rather then use some possibly fraudulent scheme to avoid paying the proper amount of tax.
@johnny, i know the property of which you speak. The difference here is that its front page news. At least, I’m sure it will be at some point. Perhaps some investigative journalist will decide to make a brouhaha of this practice.
I wonder how often this happens? If Trulia is right (and that’s a big IF), this is glaringly obvious… The Sperling’s pay more property taxes than any other SF family (1+ million), but that doesn’t mean they like it.. lol.. Socketsite even had a post on the “interesting” transfer of the Sperling’s Hyde st. property.
Anyway, the home needs to be finished and reassessed… I just hope the buyers don’t report construction costs as 1.5 million, like everyone else does!
Lovely how billionaires who don’t know the meaning of the word work get to push their tax burden onto the less fortunate time and time again. It must feel so ‘elite’ to reap so much for so little effort and then push your responsibilities onto the bums who actually have to work for their money.
Enjoy it while it lasts.
Thank you SS for writing this up so well.
The Chronicle and Examiner should be investigating this.
paying an insane amount of transfer tax
They’re paying an “insane” amount of money for a building and a plot of land. They’re doing this because there are plenty of people willing to pay “insane” amounts of money for buildings on plots of land in that neighborhood.
The transfer tax and property taxes aren’t even progressive and still it’s “too much” for the rich to pay. Amazing.
On a positive note, I walked by there the other day and the trees in front are growing fast. It doesn’t look nearly as imposing/ridiculous as it did in the past.
Owners of median-range property in SF cannot really do this easily. But someone who is set to gain 100,000+ a year in taxes can have his accountant and lawyer solve this and make it a profit center.
This is very approriate to raise this issue knowing there’s a national debate on fiscal policy currently happening in DC.
It seems to me, if you are not willing to pay the tax then you shouldn’t be buying the property. Everyone else, aka ‘working stiffs’, are paying their share, so why should the ultra-affluent be any different. It’s a matter of fairness.
If this transaction was indeed split into a ‘real propery’ portion and a ‘personal property’ portion it would be fascinating to hear about how this division was made. Maybe the architectural and engineering plans were sold separately but it’s hard to see stuff like that adding up to millions…
Just to play devil’s advocate, I’m curious how many of you have bought or sold a used car and underreported the sale price . . .
If my experience is any indication, 100%
There is no law that states the transfer tax has to be disclosed on a transfer deed. Doesn’t matter if its a grant deed or trustees deed. You just ask that it is not disclosed.
Been doing this since 1983!
It seems to me, if you are not willing to pay the tax then you shouldn’t be buying the property. Everyone else, aka ‘working stiffs’
That made me laugh. How many people are living in San Francisco off other people because they don’t want to be responsible for their own lives!
Hnoon-
Way to put it in perspective!
UPDATE: From David Sacks With Respect To 2845 Broadway (And SocketSite)