Lake Tahoe straddles two states with approximately 2/3 of the shoreline in California and 1/3 in Nevada. We often get asked about the pros and cons of buying on California side versus the Nevada side. Here are the facts to consider:
The Pros of Buying in Nevada
- In Nevada, your private lakefront property reaches to the low water line of Lake Tahoe. This means that for lakefront owners, the public cannot traverse across the beach in the front of most Nevada lakefront homes.
- If you establish residency in Nevada, there are big tax advantages:
- No Personal Income Tax
- Favorable property tax rate that has nothing to do with purchase price (property tax is generally 30-50% of what it would be in CA)
- No Corporate Income Tax
- No Taxes on Corporate Shares
- No Franchise Tax
- Nevada corporations may purchase, hold, sell or transfer shares of its own stock
- Nevada corporations may issue stock for capital, services, personal property, or real estate, including leases and options. The directors may determine the value of any of these transactions, and their decision is final.
- No Inheritance or Gift Tax
- No Unitary Tax
- No Estate Tax
- Developed on the Delaware model, the Business Court in Nevada minimizes the time, cost and risks of commercial litigation by:
- Early, comprehensive case management
- Active judicial participation in settlement
- Priority for hearing settings to avoid business disruption
- Predictability of legal decisions in commercial matters
- Much like art, view quality is in the eye of the beholder, but conventional wisdom is that properties on the eastern side of Lake Tahoe (NV) face the taller peaks of the west shore, offering a more dramatic view. This, of course, varies and is subjective.
- Nevada offers a greater selection of nightlife enterntainiment around casinos. This may be more driven by North Shore v. South Shore than Califonia v. Nevada, since much of the casino nightlife is located on lake's southern stateline. North Shore is known for having lower density, with an outdoor-driven lifestyle, whereas the South Shore has more development with more clubs, dining, and enterainment options.
The Cons of Buying in Nevada
- Nevada is more expensive, especially in Incline Village where home prices are higher than on the California side.
- If you are commuting from the Bay Area, the drive time will be longer, by 30 minutes or more, to reach your Nevada residence.
- There is less supply. The Nevada side is 1/3 of Lake Tahoe with a significant portion allocated as State Park land.
- Property tax can increase up to 8% per year for secondary residences. A long-term hold may be subject to higher property taxes.
- The prevailing wind in the summer blows out of the southwest. The Nevada side, especially the north-east side, can be exposed to higher winds.
- The casino vibe can be a pro or a con, depending on your personal preference. This impacts the North Shore less than the South Shore.
- Depending on where you are and where your preferred ski resort is, you may be be further away from skiing. Nevada ski resorts around Lake Tahoe are Mount Rose - Ski Tahoe, Diamond Peak, and Heavenly Mountain Resort
California Pros
- Supply is greater, allowing more options
- Less impacted by casinos, offering a quieter setting and a more "low-key" vibe
- The West Shore is renowned for having some of the best understated large estate properties. Despite a few recent purchases from high-profile technology executives, the West Shore has a reputation as a place for the ultra high net worth to hide out. Example.
- For skiing enthusiasts, the California side of Lake Tahoe is closer to more ski areas and includes far more options.
- The West Shore is mostly protected from the prevailing SW winds and is known for the best boating water. On the downside for some, the West Shore is generally shadier.
- Also largely driven by preference, south-facing aspects afford the most sun exposure and can offer sunrise and sunset views. More of the California side of the lake is on the North Shore, facing south. Properties on the east side generally offer great sunsets, however they are shady in the morning and get intense sun in the afternoon. Properties on the West Shore get morning sun but tend to be shady in the afternoon. This is not absolute. There are segments of the West Shore that face south and there are segments of the east shore that face north.
California Cons
- California has higher property taxes. Factor 1.25% of the purchase price annually.
- Land between the high-water mark and low-water mark on the lake is in the public trust. On many of the beaches of the California shoreline, the public can traverse across the lakefront area. If the shoreline is rocky, or the nearest public access point is far away, it is unlikely to have this impact your privacy.
- Insurance has been a challenge in both states, but the California insurance market is more difficult and expensive than the Nevada side. That said, there is no equivalent to the California Fair Plan in Nevada currently and therefore that state-sponsored safety valve does not exist in Nevada,
Other Important Considerations
- Pier, no pier. The construction of piers is highly regulated making it nearly impossible to get a pier if you don't have one. Piers are important and valuable amenities. Then there are shared piers versus private piers. If you have a private, deep-water pier with boat lift(s), it can add millions to the property value.
- Water depth. Shallow water areas will be difficult to navigate on boats, especially during drought cycles. The piers around shallow water areas will become unusable in low-water years.
- All properties in the Tahoe Basin are subject to regulation from the Tahoe Regional Planning Agency, regardless of what state the property is in. There are local controls from other county agencies, but the restrictions mostly come from the TRPA.
- Incline Village for the win! Incline Village has the most positive attributes that drive desirability and value. Therefore, IV has the most expensive real estate around the lake. Compounding high values is the small supply of lakefront homes in Incline.
If you are interested to learn more or if you have any questions, please reach out to us at DietzGroup@TLUXP.com.