By Quentin Fottrell
This is an unorthodox proposition. Sell your multi-million dollar Venice Beach house, which once belonged to Eric Clapton, donate anything above the market price to the relief efforts in Japan and get a highly lucrative tax break while you’re at it. Sounds too good to be true? Not if you live in California. If you are, you may qualify for a generous tax break. And a potentially hefty charity donation could be one way to qualify.
It was designed by the Japanese architect Arata Isozaki, his only private residential design. Included in the house’s fixtures and fittings: a never-released solo recording by Clapton. Meadows, who volunteered in Sri Lanka after the 2004 tsunami, has pledged to donate anything he gets over the current market price of the Venice Beach house to the relief effort in Japan.
Whether or not you believe the offer is in questionable taste, he is at least 100% honest about his intentions. “It would be a tremendous tax benefit,” Meadows says. “I don’t want to be greedy but I want to do what’s financially prudent at this time in my life.”
He currently pays around $12,000 a year in taxes on his old home and $28,000 on his new $2.45 million Bel Air home, which he purchased about a year ago.
But California’s Prop 60/90 can change all that. In simple terms, Prop 60/90 allows some house-sellers to move and take the lower tax base of their old home with them. Residents who are over 55 in Los Angeles and several other counties in California, are eligible. But the price of your new home can’t be more than the current market value of your old one.
Hence, his charitable offer: “Basically, we would record the sale at the amount I need for the Prop 60/90 and any extra would be provided to the relief efforts. The bulk of the tax benefit for any additional amount would be to the buyer.”
Prop 60/90 is a one-time only filing. The new home must also be purchased or built within two years before or after the sale of the original property, and Meadows is running out of time. He must complete the deal by January of next year if he wants to qualify and, as he hopes, effectively halve the taxes on his new property.
But what if the seller gets wind of his plan and just wants to give the asking price? “Then nothing goes to charity, unfortunately,” Meadows says. “The hope is to get multiple offers.”
Pay Dirt spoke to a real estate agent in the area, who says houses in Venice Beach are selling for 5% below market value. But given that the previous owner was Eric Clapton (who happens to celebrate his birthday today) and the reputation of the Japanese architect, both Meadows and the as-yet unnamed charity in Japan could get lucky.
What do you think? Good publicity, good intentions or both?