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Taylor Swift has become known worldwide for her catchy songs and record-breaking concerts. A lesser-known fact about Swift is that she has taken some clever tax measures to ensure that she pays less in property taxes than the average citizen. Ms. Dow Jones shared a video analyzing how Taylor Swift saved a significant amount on property taxes.
Why does Taylor Swift pay less taxes than you? We'll break down how she does it.
The Mills Act to save money on property taxes
The Mills Act is an important economic incentive program in California designed to encourage private homeowners to restore and preserve qualified historic buildings. This groundbreaking innovation was enacted in 1972 and qualified historic property owners can enjoy an average property tax reduction of approximately 50%.
When Taylor Swift bought a $25 million mansion in Beverly Hills, it was a strategic tax move that helped her save on property taxes. It could take advantage of this program by purchasing the historic Samuel Goldwyn Estate and securing its landmark status. Although achieving landmark status presents a number of challenges, Swift received approval.
Because 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 donation tax write-offs.
If this 10,982-square-foot home didn't have landmark status, Swift will likely be left with a $275,000 annual bill due to property taxes. Because of the Mills Act and tax incentives, her property taxes could be an estimated $55,000 per year. This unique strategy helped her reduce her tax bill for the year.
Considerations for Saving Money on Property Taxes
Swift turned her $25 million California mansion into a home and tax haven. While this is a significant tax break, legal issues could prevent Swift from remodeling her home. The U.S. Department of the Interior has strict rules and standards for historic preservation and limits changes so that the historic features of the property are not affected.
While landmark status saves money, it's worth noting that Swift can't make any updates without approval from the Beverly Hills City Council. For example, she would need to get permission to add a recording studio to the property. Historic preservation guidelines may be strictly enforced, so this is important to keep in mind.
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