For well over a year, Musk has been making moves that would bolster the case that he’s now a Texas resident. After the billionaire listed four of his Bel Air homes in May 2020 for $62.5 million, a Los Angeles developer, Ardie Tavangarian, announced that he’d reached an agreement to buy them.
The transaction took almost six months to close, property records show. They were transferred on Dec. 17.
The records also show that Musk personally stepped in as a lender on the transaction, providing Tavangarian’s company the full purchase price—in fact, Musk lent $62.3 million, while the properties were sold for $61.9 million.
Tavangarian didn’t respond to multiple requests for comment.
A fifth Bel Air property sold for $7 million in October. It, too, was financed by Musk, who provided a $6.7 million loan to the purchaser. Another was sold in June in an all-cash transaction.
A home in the San Francisco Bay area took longer to offload, but Musk never listed it as his personal address.
Musk can’t totally escape his tax obligations to the Golden State. Those options he exercised? If treated as compensation and subject to ordinary income taxes, California would generally still have a right to tax whatever was earned before he moved—probably the bulk of the options. That’s because the options are treated much like salary, as income paid to Musk for his work at Tesla.
But the timing of the exercise of the options could also be designed to reduce taxes. If he waited until August next year, when the options expire, he runs the risk of incurring additional taxes included in the latest version of the Democrats’ Build Back Better Act. The legislation, approved by the House of Representatives on Nov. 19, would create a new 8% surcharge on income above $25 million.
For now, Musk has been building an empire in tax-friendly Texas. And the billionaire appears to have held up his earlier Twitter vow. He has said he’s living in a $50,000 house—a rental.
This article was provided by Bloomberg News.
--With assistance from Romy Varghese.