Billionaire Questions Tax Appraisal For Mansion County Says Bill Gates’ House Is Worth $53 Million; His 1998 Property Tax Could Total More Than $600,000
King County says Bill Gates’ new house on Lake Washington is worth more than $53 million.
Gates wants a second opinion.
The Microsoft Corp. co-founder, who has spent the last seven years building his 40,000-square-foot mansion on a wooded compound in the moneyed Seattle suburb of Medina, is questioning the tax appraisal made by the King County assessor’s office.
Gates; his wife, Melinda; and their 1-year-old daughter, Jennifer Katherine, moved into the home two weeks ago.
Like Gates, the richest man in America with a fortune estimated at more than $38 billion, the house is unique.
Set on five acres that include a man-made trout stream, much of the high-tech home is underground and features extensive use of wood and stone. Among other things, it has a 60-foot pool, a sauna, a 1,700-square-foot guest house, a trampoline room, a 20-seat theater, an arcade, a 24-screen video wall, a sport court, a dock for water-skiing, two spas, a formal dining room and library and a reception hall for 100 people.
For 1998 taxes, the county assessed the property at $53,392,000, said Brent Wilde, chief appraiser. That figure is based on construction costs, Wilde said, but Gates says it might be more realistic to base the appraisal on what he could get for the property should he sell it.
“He has retained an appraisal firm to find evidence of the market value, but they have not filed an appeal of the value yet,” Wilde said.
The 1998 tax valuations are just now being mailed. From the time they are sent, Gates has 60 days to formally appeal.
“People associated with the house have yet to meet with the assessor to talk about valuation,” said Microsoft spokesman John Pinette. “It would be premature for me to speculate what the valuation might be or what approach might be taken.”
Last year, with workers still swarming over the construction site, the property was valued at about $33.4 million. According to county records, Gates’ property tax for 1997 came to $388,830. At that tax rate, his 1998 tax would be $620,714.
Wilde said the county’s estimate is based on building permits issued by the town of Medina. He said that for the past several years, Gates has declined to give the county the actual construction costs.
In the past, Wilde was allowed out to the house to inspect it. But this year, Gates said no, citing security reasons.
Gates’ representatives, however, “have been providing evidence they think would be useful to us in evaluating the property and, of course, they are watching out for Mr. Gates’ best interests,” Wilde said.
Wilde said it’s hardly rare for taxpayers to complain about their assessments - more than 3,700 appeals were filed last year. And for people with one-of-a-kind luxury homes, especially waterfront property on Lake Washington where real estate values have soared, there’s often plenty of room for dispute.
The assessor’s office believes construction cost is the best indication of value in Gates’ case, Wilde said, but it is willing to hear his side.
“I think, to be fair to them, they are concerned the actual costs could be misused or misunderstood,” he said.
For one thing, Wilde said, a project of this size and longevity involves a lot of waste. Gates originally estimated the house would take two or three years to build and cost up to $10 million, but design changes stretched out the job and its price tag.
“If you can imagine building a house of this magnitude and quality, there’s a certain amount of trial and error,” Wilde said. “It all goes into the cost, but there’s nothing to show for what you took out.”
Also, luxury homes normally are tailored to the tastes of their owners. While Gates, say, might cherish his trampoline room and huge underground garage, a potential buyer might care less.
“To be fair to them, too, there is a big possibility a super-mansion like Mr. Gates’ is probably similar to San Simeon,” the California mansion of the late newspaper publisher William Randolph Hearst, Wilde said. “They are never sold but end up being a museum or donated to a university or something. The market value, should Mr. Gates choose to sell it, could be anywhere.”
xxxx IN CONTRAST In contrast, an average-sized tract home in Seattle valued at $124,900 carries an annual tax of $1,663.