Owning a mansion sounds like a fantasy. You can almost picture your kids (or yourself) sliding down the opulent banister like Mary Poppins. Of course, when that tires you, you can retreat to your library, study, conservatory, or any number of the spacious interior or exterior sanctuaries your manse is sure to have. While this all sounds great in theory, and the prices of mansions are holding or even falling in some markets, mansion life can come with some unexpected costs.
According to the latest Luxury Defined report, which comes from luxury real estate leader Christie’s International Real Estate, the average starting price for a luxury home in the United States ranges from $1 million+ in the Atlanta area to $8 million+ in the Los Angeles metro area, but don’t think that’s the all-included pricing. No, these megahomes come with some mega carrying costs, and prospective homeowners can find themselves in financial troubles quickly if these costs are not planned ahead of time.
Tax Collector Comes Calling
The only sure things in life are said to be death and taxes, and no matter where you call home in the United State, you’re probably going to be paying property taxes. While the scale runs from states with an extremely low tax rate (like Louisiana at 0.18% or Hawaii at 0.26%) to the top taxers in New Jersey (1.89%) and New Hampshire (1.86%) these taxes are applied to the value of the home and are collected every year. Alternatively, some states have decided to forgo statewide property taxes and instead allow counties, cities, and municipalities to collect these taxes. Additionally, some areas have adopted a “transfer tax” in lieu, or sometimes in addition to, annual property taxes. This transfer tax is charged when the property changes hands and often works on a stepped scale based on sale price.
But if you’re buying a mansion, there might be another tax to be paid on your home. Some states have adopted a so-called “mansion tax” or an additional surcharge on homes over a certain value. In addition to the standard property taxes levied on all properties in an area, some locales have decided to increase the rate for those above a certain value.
Maintenance is Essential
So you’ve picked up your very own mansion. Congrats! While you’re probably busy dreaming of the best paint color to accent the custom murals on your walls, you might want to make a little more space for maintenance costs. The bigger the estate, the bigger the fees to keep it in good condition. Many megahomes have multiple HVAC systems, high-tech surveillance systems, and extensive outdoor areas like pools, tennis or basketball courts that all require upkeep. Instead of worrying about one refrigerator going out in standard home, a megahome could have two or three kitchen where any number of things could go wrong. Groundskeeping also factors in to the maintenance costs of a home and while, depending on the estate size and location, the annual costs can approach those of a small golf course. This financial burden is, of course, not always something that is thought about ahead of time and can quickly lead into troublesome waters for a new owner.
Bills, Bills, Bills
If you’re relocating from a townhouse or condo in the city to a palatial country estate, you may be in for quite a surprise the first time the utility bills come due. In many shared living arrangements, utilities can be covered by a general fund or included in the price of rent. Even when utilities are not covered, the price of heating and cooling a standard 1,700 square foot home and a 50,000 square foot mansion with 12 foot ceilings is going to be drastically different. You can expect to see this extreme difference in everything from water and electricity costs to gas and cleaning supplies.
It Takes a Village
On top of all the previously mentioned costs, it’s also important to think about who will do the work. Typically an expansive home requires at least some staff. Many elect to have at minimum a housekeeper and landscaper, but also employ a security guard, personal chef, and additional groundskeepers. While this amount of manpower makes perfect sense with a home the size of a small hotel, the costs add up quickly.
Living in the lap of luxury seems like a dream, but it’s important to remember that the home you choose should be an investment into your future, not a burden. The costs add up quickly, and if you don’t plan properly, you could up in a bad situation for a long time. Just ask 50 Cent.
Want to learn more about choosing the home that’s right for you? Check out our blog, How Big of a Home Do You Really Need? Ready to buy? Check out the great selection of luxury homes available now by clicking here.