If you make $1m/yr and are scraping by, I don't care where you live, you're terrible at managing money.
I currently pay $4500/mo to rent a home in California. Because of it's location, the home would cost $2M+ for me to buy. So the debt service / maintenance / taxes is way more than the rental income. You're either renting the house or renting the money (mortgage). The idea that you're throwing money away on rent never considers the gap between rental income and expenses, vaporized down payments and going underwater from falling prices, tax hikes, etc.
I'll probably move into a smaller house soon because I don't need as much space and I've been buying investment homes instead of worrying about my primary residence. My first investment property pays the mortgage and makes money. It's increased in value too but I don't bank on that.
Why buy a home you cannot rent out for more than the debt service? Also - why buy a starter home in California for $1M+. That's fundamentally messed up to spend that much on a home that you know for a fact is not your forever home. The only way to know if it's a good deal is if you can rent it out for more than it costs, or about the same and you're going to be there for ~7 yrs+.
I've rented 4 different homes in Cali and 3 were owned by family trusts. The one that wasn't made nothing and she ended up selling to get out. I rented that house for $3600/mo and she got 925k for it.
But yes most landlords out here are lucky if they break even. They take tax write-offs and hope for appreciation. Cap rates in Cali are super low and prices are really high.
It's about $33k. My only friends that make that much money work in tech. $33k is a comfy yearly salary in Montana.
High W2 income earners are heavily taxed in the US.
45-50% is a better total estimate for a total tax rate.
The last dollar made is taxed at 53% (40% federal, 13% CA), so that's why the 60% number didn't sound horribly off. This is also ignoring FICA and SS taxes, which it's far too late to do the math on :)
Someone earning £1,000,000 in the UK would pay 46% tax.
Not necessarily. Everything in SF/Bay Area will require a compromise. Want to save on real-estate? You will pay in time traveled. Want to save on travel, you pay for somewhere to live. Either way you loose.
For all the hi-tech in these companies the question should be asked, "Why do you have to come to work to do your job?" Is it necessary every day?
I'm pretty sure you'd be able to live in most large cities like a king for USD1M. What is the traffic and parking like?
Tricks like buying out of the super expensive area, meaning paying in time.
Plus they probably want a house in San Francisco itself, which has hyperinflated housing prices.
She didn't say it was their net income either.
I've never seen it done with a seven-figure income though.