South Lake Tahoe residents vote on controversial vacancy tax proposal

Residents of South Lake Tahoe are preparing to vote on Measure N, a proposed tax targeting vacant homes. The measure seeks to impose a $3,000 tax on properties left empty for 182 days or more each year. If a home remains vacant for half the year or more in subsequent years, the tax would rise to $6,000 annually.

Eric Teusink, managing partner at Williams Teusink in Decatur, GA, commented on the trend: “Vacancy taxes have become more popular in the past decade as a potential solution to the housing shortage crisis, especially in places like California where the crisis is acute.”

Critics argue that second homes contribute to South Lake Tahoe's housing crisis by reducing affordable rental availability. Currently, median rent in the area stands at $2,600 per month, significantly higher than the national average of $1,743.

According to the 2022 American Community Survey, about 44% of South Lake Tahoe’s housing units are vacant. The city has approximately 7,000 such homes.

Lake Tahoe has long been favored by affluent individuals. Celebrities like Cher and Frank Sinatra have resided there. Meta CEO Mark Zuckerberg is currently developing an extensive compound on its shores after purchasing properties for $59 million in 2018 and 2019.

Sabrina Burge, a local cafe manager, expressed concern over rising property prices due to wealthy homeowners: “Billionaires building mansions on the lake will attract more wealthy homeowners... making it more difficult for locals to buy homes.”

The debate over Measure N has sparked heated discussions online. A Reddit user argued in favor of the measure: “I will vote yes on a vacancy tax. What makes the community vital is permanent residency.” Another user questioned government involvement: “Should the government dictate where I can and cannot reasonably be?”

Similar measures are being considered elsewhere; Hawaii and Colorado are exploring vacancy taxes. Vancouver and San Francisco have already implemented such taxes but face legal challenges.

Teusink addressed constitutional concerns regarding Measure N: “Most constitutional arguments against the taxes center on an argument that a tax of this nature is a violation of Takings Clause... However... taxing real property and taking actions to alleviate shortages are normal government actions.”

Voters will decide Measure N's fate next Tuesday amid ongoing debate over its implications for property rights and housing supply. Real estate investors nationwide are watching closely. Michael Sherrill remarked: “If the issue is shortage of supply... municipalities which prevent new construction and rezoning are the ones who need to be challenged—not the homeowners.”