Taylor Swift has become known globally for her catchy songs and record-breaking concerts. A lesser-known fact about Swift is that she has made some savvy tax moves to ensure that she pays less on property taxes than the average person. Mrs. Dow Jones shared a reel that analyzed how Taylor Swift saved a significant amount on property taxes.
How does Taylor Swift pay less in taxes than you? We will break down how she does it.
The Mills Act To Save Money on Property Taxes
The Mills Act is a crucial economic incentive program in California designed to encourage private homeowners to restore and preserve qualified historic buildings. This game-changer was enacted in 1972, and qualified historic property homeowners can enjoy an average reduction in property taxes of around 50%.
When Taylor Swift purchased a $25 million mansion in Beverly Hills, it was a strategic tax move that helped her save on property taxes. She could utilize this program by acquiring the historic Samuel Goldwyn Estate and ensuring its landmark status. While obtaining landmark status has its own set of challenges, Swift got approval.
Since her home is considered a historic landmark, Swift is estimated to save 20-80% on property taxes through this method, along with tax credits for any renovations and eligibility for charitable contribution tax write-offs.
If this 10,982-square-foot home didn’t have landmark status, it’s believed that the property taxes would leave Swift with an annual bill of $275,000. Due to the Mills Act and the tax incentives, it’s estimated that her property taxes could be $55,000 annually. This unique strategy has helped her drop her tax bill for the year.
Saving Money on Property Taxes Considerations
Swift turned her $25 million mansion in California into a home and tax haven. Even though this is a significant tax break, legal issues could prevent Swift from modifying her home. The U.S. Department of the Interior has strict rules and standards for historic preservation and limits alterations so that the historical features of the property aren’t compromised.
Even though the landmark status saves money, it’s worth pointing out that Swift can’t make any updates without approval from the Beverly Hills City Council. For example, she would have to request approval to add a recording studio to the property. The guidelines for historic preservation can be strictly enforced, so that’s something to keep in mind.
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