Last June, one of the largest privately-owned estates in Palm Beach county hit the market. The asking price? $79.5 million. According to the Wall Street Journal, Oracle founder/Tesla investor Larry Ellison just scooped it up for "just above" $80 million.
Situated on 7.35 acres in a North Palm Beach gated community, this incredible estate has 520 feet of ocean frontage. The 15,500 square-foot main home has seven bedrooms, a home theater, and an exceptionally large wine room. The grounds, which resemble a golf course, have several pools, a tennis court, and a large sports center.
The seller, activist investor Gabe Hoffman, bought the property in 2012 for $17.5 million. That’s quite the increase over 9 years of ownership! If you think about it, Gabe was basically paid $7 million a year to live at the house (before upkeep costs and property taxes).
Unraveling the Success of Larry Ellison
Larry Ellison earned the bulk of his $89 billion fortune thanks to the software/database company Oracle, which he founded in 1977. For those who aren’t sure what Oracle does – you know how PC computers run on Microsoft products? Most business and government computers (servers, payroll services, databases) run on Oracle products.
As a titan in the tech industry, Larry has been a lifelong cutthroat rival to Bill Gates. Oracle went public on March 12, 1986, just a day before Microsoft. Today, Microsoft has a market cap just shy of $2 trillion. Unfortunately for Larry, that’s about 10 times Oracle’s market cap today. However, Larry still owns more than 30% of Oracle, while Gates owns less than 3% of Microsoft.
Oracle isn’t Larry’s only source of wealth. Over a period in 2018, Larry quietly spent $1 billion buying Tesla stock. By the time he revealed his stake to the SEC, he had accumulated 1.7% of Tesla, enough to make him the second-largest individual shareholder behind Elon Musk. Elon promptly added Larry to Tesla’s board.
Why Larry is Leaving California
In December, Larry announced he was planning to leave California. He cited California’s extremely high (and only getting worse) taxes as his primary reason for abandoning his home of more than 50 years.
Larry has quite a bit of income to protect from taxes! He owns 1.1 billion shares of Oracle. Whenever Oracle pays a dividend, Larry receives a massive injection of cash. For example, just two days ago—April 7—Oracle issued a dividend of $0.34 per share. That means at some point this week, Larry received a $374 million direct deposit from his company.
In 2020, Oracle issued four dividends, resulting in almost exactly $1 billion in cash payments to Mr. Ellison. Since 2003, he has received $12 billion from Oracle dividends alone, averaging about $1.7 billion per year.
Tax Savings in Florida
With each of those dividend payments, the California Franchise Tax Board has taken 13.3% off the top. On the $12 billion he’s earned since 2003, California’s tax man has gobbled up $1.6 billion.
Florida has no state income tax. If Larry earns another $12 billion in dividends over the next seven years, by moving to Florida, he’ll save:
$230 Million Every Year!
Every single day that Larry Ellison lives in Florida over California, he’ll save $644,000. Every day.
In other words, Larry will pay for his new $80 million mansion free and clear on dividend tax savings alone, every four months!
Larry's Impressive Real Estate Portfolio
Larry leaves behind quite a California real estate footprint. For much of the last several decades, his primary home has been a 45-acre estate in the Bay Area suburb of Woodside. The property and mansion are modeled after a 16th-century Japanese garden estate. It even features a 3-acre man-made lake that has multiple waterfalls. People who have been there have described it as nothing short of magical. This estate could be worth as much as $200 million if it was ever listed for sale.
Then there’s Malibu. Between 2004 and 2005, Larry spent $180 million to acquire 12 properties in Malibu, California. He spent a total of $65 million to acquire five contiguous properties on one stretch of Malibu’s ultra-exclusive Carbon Beach.
Then there’s Rancho Mirage/Indian Wells. In 2009, Larry paid $100 million for the Indian Wells Tennis Garden (a large tennis center) which hosts the annual BNP Paribus Open. Two years later, he paid $43 million for the nearby 249-acre Porcupine Creek Estate golf course, located halfway between Palm Springs and Palm Desert. Just last week, Larry received permission from the Rancho Mirage town council to convert 191 acres of Porcupine Creek into an exclusive retreat. The remaining 60-ish acres are his private residence.
Owning an Island
Outside of California, Larry owns the Hawaiian island of Lanai. I don’t say that as an exaggeration when I really mean he owns a lot of land on the island. He owns the island. Larry bought Lanai in 2012 for $300 million. Over the last decade, he has spent more than $500 million upgrading the island, primarily its Four Seasons hotel, which now has a SECOND location in addition to the original beachfront retreat.
Congrats on the new house, Larry! Sorry to see you leave California! Hope our state politicians wake up some day and realize we need to reduce taxes on individuals. I don’t know why any billionaire would ever choose to live in California at this point.
