California readies intrusive audits for billionaires who fled ahead of Prop. 40's November vote
California is preparing to open intensive residency audits on some of the world's wealthiest former residents, and the consequences for luxury mortgage markets in Nevada, Texas, and Florida are already taking shape.
The state's California Franchise Tax Board (FTB) is expected to target individuals who relocated in late 2025 ahead of Proposition 40, the 2026 Billionaire Tax Act.
Heading to a November statewide vote, the measure would impose a one-time 5% levy on global net worth exceeding $1 billion, based on residency as of January 1.
The initiative's drafters — tax law professors at the University of California Berkeley, University of Missouri, and UC Davis — project it would raise approximately $100 billion for healthcare, food assistance, and public education.
The most high-profile targets include Google co-founder Sergey Brin, whose net worth Forbes estimates at $270 billion, who reportedly purchased a mansion on the Nevada side of Lake Tahoe in December and listed Nevada as his home state on a campaign finance filing this year.
Venture capitalist and White House adviser David Sacks and Uber co-founder Travis Kalanick are also in the frame, having reported moves to Texas before the January 1 effective date.
A game of chess and a fight that will go to court
The FTB's approach extends well beyond tracking days spent in-state. Its staff handbook instructs examiners to determine whether a former resident has "substantially severed his California connections upon his departure or whether he maintained his California connections in readiness for his return" — a test that covers children's school enrollment, vehicle registrations, medical providers, and bank accounts.
Pat Dwyer, co-founder of Aligned Wealth and a financial adviser to ultra-high-net-worth clients, told the Financial Times the process amounts to high-stakes legal warfare.
"Residency is murky and California are really tough, along with New York, in looking at more than just time spent in the state to decide whether you really live there," he said.
"It's like a game of chess, your lawyers against their lawyers, and it'll end up in court."
Darien Shanske, a professor at the University of California Davis School of Law who advised the initiative's drafters, dismissed superficial relocation tactics.
"Sending your assistant to get a driving licence in Nevada, spending Christmas at your home in Miami and writing a mean tweet about California are only moves on paper," he told the Financial Times.
What it means for mortgage brokers
The billionaire migration is already creating concentrated demand for jumbo origination and portfolio lending in destination markets. Wealthy buyers drove US home prices to an all-time high in June, with 22.2% of homes sold above list price — the highest share in over a year — according to Redfin data.
Global luxury property searches targeting US homes doubled in the first five months of 2026, per JamesEdition data cited in the Coldwell Banker Global Luxury 2026 Mid-Year Report, with Nevada and Florida among the primary beneficiaries of westbound capital flight.
An earlier analysis of how blue-state tax proposals are reshaping luxury real estate markets identified brokers in Sun Belt metros as well-positioned to capture the resulting surge in high-net-worth purchase transactions.
San Francisco Bay Area tax attorney Alex Kugelman expects any audit disputes to be prolonged and deeply contested.
"If the tax goes through, the FTB will not be afraid to try to collect it," he told the Financial Times.
"And obviously people of that means will have the top tax litigators. These fights will go all the way."
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