Purchased for $2.85 million in May of 2013, the 2,100-square-foot penthouse unit 1C atop the Watermark at 501 Beale Street was redesigned and dramatically remodeled in 2014, yielding a designer residence with an open floor plan; panoramic Bay, bridge and city views; and an oversized master suite with an attached office (or third bedroom) and a “spa-like” bath.

Having returned to the market in September of 2019 priced at $4.695 million, or roughly $2,200 per square foot, the asking priced was then slashed to $3.595 in March of last year, which failed to secure a buyer.

At the very end of last year, the property was then donated to International Justice Mission.

And having been listed anew for $3.295 million last month, the “one-of-a-kind oasis in the heart of the city” is now in contract (with an official “21 days on the market” according to all industry stats and reports).

Comments from Plugged-In Readers

  1. Posted by TBK

    There’s something very fishy about this property. If you check Zillow, or any other site that shows property tax info, you’ll see that all the other units in this building are taxed based on their last sale price. But this unit has been valued around $300k since at least 2007, even though it’s the most expensive unit in the building.

    How is that remotely possible? The donation doesn’t play into it since that only happened in late 2020. Smells of insider city corruption.

    • Posted by SocketSite

      If you were to check the actual Assessor-Recorder Secured Rolls for the unit, you’d realize those sites and/or quoted values are incorrect.

      • Posted by TBK

        I did before commenting.

        Unit 1C has property tax bills of $2,495 (x2).

        • Posted by John L.

          Acquisitions can be structured in ways that don’t qualify as a “change of ownership” under Prop 13, for the purpose of evading reassessment. It’s pretty common in commercial real estate, but less so in the single family and condo markets. If the property is owned by a LLC then it’s possible that might be going on here.

          • Posted by SocketSite

            Or once again, “those sites and/or quoted values are incorrect.”

          • Posted by Bayview_Rising

            Can you explain more? Does the original owner become a member of the LLC with no shares? How does this work?

        • Posted by SocketSite

          Except unit #1C is not the penthouse unit (which is #PH1C).

          • Posted by TBK

            That explains it … thank you.

  2. Posted by jenofla

    I love the views…could live there…but I’d want to be single, because someone taking a dump behind a slatted partition while you’re reading in bed is a complete dealbreaker designwise for a couple.

    • Posted by emanon

      Indeed! ““spa-like” bath”” my a##. No privacy/separation from the bedroom, no storage, the single step is a trip hazard, nothing to keep water flow out of the bedroom. It reminds me of so many W hotels where every time one used the shower the entire room (bath, bed, and entrance) flooded. Just ridiculous.

      (And that kitchen looks like the breakroom in my office building.)

    • Posted by AY

      Glass partition wall could solve that pretty easily without destroying the aesthetics.

      • Posted by emanon

        But not the light issue for the person still in bed. How about designing a bathroom that doesn’t have issues to “solve”?

    • Posted by The Milkshake of Despair

      Rule #1 of bathroom design: There must be a solid door between the bedroom and the chamber of excremeditation.

    • Posted by don_keesho

      #2 Rule of relationships: No one takes a dump in the master en suite when there are other bathrooms in the house. Ya’ll must be single or have a hard time imagining the aristocratic luxury of having an extra bathroom.

      • Posted by emanon

        I’ve been “dumping” in my husband’s presence for 20 years. Why does my en suite come with a toilet if we’re not supposed to use it?

        • Posted by Brahma (incensed renter)

          I think the assumption they are making is that people who can afford to purchase a $3M penthouse apartment don’t relieve themselves like the rest of us.

        • Posted by don_keesho

          that #2 rule is not for all of us.

          but are you a bird? or can you urinate without defecating?

  3. Posted by Rob

    Is the donation followed by a sale just a tax trick. e.g. You claim the donation is worth 4.7m or 3.6m when you donate, and then the charity sells at the real value of 3.3m. If you are a rich CA resident the taxes you save from a large donation like this are like worth 1.5-2.5m. The donation still costs you something, but you get a pretty great deal on it (it costs you as little as $1m to donate 3.3m to the charity).

    • Posted by not sure why this is all caps

      It’s a tax trick even if you accurately value the donation, which they likely will, since there’s an open-market sale shortly after.

      Our tax code allows the donor to deduct the full value of the property, even if never taxed. Here is what I mean.

      In Year 1, I buy $10 in stock [or any asset that changes in value, such as an apartment].
      In Year 10, the stock is worth $110. I sell it.
      My gain is $100. I pay taxes on $100, so $15 in long-term capital gains.
      Net: $15 to the government, $85 gain to me, and I get my $10 back.

      In a just world this would be taxed at the same rate as regular income, but it isn’t, but that’s not even the best trick. Here is the best trick:

      In Year 1, I buy $10 in stock.
      In Year 10, the stock is worth $110.
      I don’t sell it, though; I donate it to a 501(c)(3) charity.

      How much of a deduction should I get? I donated $10 of money on which I have already paid taxes (the purchase price) and $100 of money on which I have paid no taxes.

      The “right” answer according to people who think about these things is $10, because why should I get a deduction on money that was never taxed?

      Of course in the real world the answer is I get a deduction of $110, which I can use to reduce my ordinary income, which for rich people is taxed at 35%. So I pay $38.50 less in taxes. So the net is:

      The government pays me $38.50
      I give $110 in value to the charity
      I end up $71.50 poorer but the charity is $110 richer, with the government making up the difference.

      This is an insane giveaway to rich people and charities rich people like. The entire government should be ashamed of itself for perpetuating it. It only survives, I think, because it takes a while to explain.

      • Posted by thattechguy

        This was incredibly informational. I learned something new today. The only reason I visit this website any more is to learn from the smart people in the comment section who I know read this site.

        • Posted by Another architect

          Yes, I’m also grateful for the explanation. Thanks for taking the time.

      • Posted by Freeloader

        Yes, once I learned about this, I’ve found it hard to donate any other way. And with employer matching, it’s even better (from the donor/recipient perspective).

        If your 501c3 doesn’t accept stock donations, you can look into Donor Advised Funds (DAF). You have to pay an annual fee but get more control and all the savings you mention above.

        • Posted by not sure why this is all caps

          As you should do! Take advantage of this insane giveaway, until they repeal it. Someday. Fingers crossed.

          • Posted by zwellig

            It’s not really a giveaway since in your example you end up $71.50 poorer. It’s just an incentive to donate to charity. Plus the income tax is already extremely progressive. The top 10% pay 70% of all income tax, the top 50% pay 97% of all income tax. The average tax rate for the top 10% is 21.5% so the savings from a deduction is smaller than in your example.

            Also since capital gains are taxed based on nominal dollar value not real dollar value (inflation adjusted) this creates a stealth wealth tax.

            If I have $100 in an asset with a stable real value and hold it over a period of 10% total inflation now this asset is worth $110 in new dollars. If I sell it I’m taxed on the $10 nominal gain even though there was no actual real gain. The government printed money which devalued the dollars already in circulation and got a cut of the real value of my assets.

          • Posted by SocketSite

            For those actually looking for an angle (or potential outrage), we might suggest looking into a donor-advised fund and related asset valuations (which we’ve referenced before).

            And now back to the property at hand…

      • Posted by Anthony Rizzo

        Charities are way better at getting the money to the final destination. Most charities you donate $1 and 60-70 cents goes to the cause. The 30-40-% goes to overhead. Give Our government a $1 and maybe 20 cents gets to the final destination. Churches, non profits are way better utilizing the money then the government. The only time non profits get crappy is when the funding comes from the government.

      • Posted by Wiger Toods

        “…with the government making up the difference”

        By that, do you mean the tax payers? Honest question

        • Posted by not sure why this is all caps

          Yes, this is literally true. What I said was:

          “I end up $71.50 poorer but the charity is $110 richer, with the government making up the difference.”

          If I give appreciated property with a value of $110 and a cost basis of $10, with a marginal tax rate of 35%, I can deduct $110 from my taxable income, which is worth $38.50 to me. So I pay $38.50 less in taxes than I would have otherwise. The charity gets $110 of value, because it gets the full worth of the property.

          Thus I end up $71.50 poorer but the charity is $110 richer, with the government making up the difference.

      • Posted by inthemarket

        If you are mad about donated real estate, you really should looking into the money laundering world of high end art. You buy pieces or art from an artist, for cheap, that you and your sycophants groom into a famous artist. If you are already friends with curators at the museums or donated to the museum before, you then ask them put couple shows for the artist in question and their reputation goes through the roof. Then when the “value” of the art increases, donate that “art collection” to the museum and offset your taxes (and even have a wing named after you).

      • Posted by another anon

        It is a 100% false statement to state the the government pays you anything when your taxes are reduced.

        Anyway, the only way to make a fair tax system is to have a flat tax, but that will never happen. So instead, embrace the tax code including all of its innumerable beneficial nuances since it is never going to materially change.

  4. Posted by bg

    am i missing something or is the kitchen lacking a fridge and an oven?

  5. Posted by civ-e

    wonder if the homeless center has deterred potential buyers from this building.

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