The Million Dollar Question: What’s the typical annual carrying cost of a $10 million estate?
The Million Dollar Question this Friday:
What is the typical annual carrying cost of a $10 million estate — property tax, insurance, and maintenance, before any staffing — as a percentage of the home’s value?
A) ~1% B) ~2% C) 3–5% D) ~8%
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Most people guess low — 1 to 2 percent feels right if you’re picturing property tax alone, which is the only carrying cost most homeowners ever think about. The actual answer is 3 to 5 percent of the home’s value every year, and on a $10 million estate that works out to $300,000 to $500,000 annually, before a single staff member is hired.
Property tax alone swings by nearly 10x depending on the state. Per the Tax Foundation’s 2026 data, effective rates run from about 0.27% in Hawaii to roughly 1.7–2.2% in New Jersey, Illinois, and Connecticut — meaning the same $10 million house pays anywhere from $27,000 to $220,000 a year in tax alone, before insurance or upkeep are even counted. Insurance adds another 0.3 to 1 percent in low-risk geographies through specialty carriers like Chubb Masterpiece or AIG Private Client Group, but climbs to $80,000–$200,000+ in wildfire or hurricane zones, where non-renewal rates are running roughly 80 percent higher than in low-risk areas. Maintenance is the quiet multiplier: the standard 1% rule that applies to an ordinary home doesn’t hold at the top end — luxury properties typically run 2 to 3 percent of value a year in upkeep, and the highest-end estates run 5%+, because major system replacements (HVAC, roofing, pool equipment) come around every seven to twelve years regardless of how carefully the house is kept.
What the answer reveals: the purchase price is a down payment on a permanent operating cost, not a one-time number. Add staffing — $200,000 to $500,000 a year for an estate manager, groundskeeper, and housekeeping on a fully-staffed $10M property — and an estate in a high-tax, high-risk state can clear $700,000 a year, or 7%+ of its value, with no acquisition math involved at all.
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This question is treated in full in Houses: First Homes, Second Homes, and Estates, which walks through the four-tier housing ladder — first home, second home, estate, compound — and the insurance crisis now reshaping ownership in wildfire and hurricane zones.
If you have a Million Dollar Question you’d like to see treated in a future Friday email, send it to [email protected].
— Logan Pierce
Editor, How Millionaires Live
