Californians have been jumping ship to Texas for years. It's rumored that we're going to see an influx of more Californians because new tax measures that were passed in November 2012 called Proposition 30. This Proposition 30 is going to effect a lot of people, but according to out-dated data from 2009, "they" think it will only really effect the top 3% of California taxpayers.
Here's information about California's Prop 30, but I wanted to comment on a couple of things for those CA people wanting to move to Texas, as things aren't always greener on the other side without running your numbers properly. It's always about the numbers... There is an uproar with CA raising their sales tax from 7.25% to 7.5%. Local taxing jurisdictions can also impose a tax on top, but going through a CA website, it seems most areas are at 8% with a few handfuls at 9%. Texas has a state sales tax of 6.25% with local taxing jurisdictions able to impose their own taxes up to 2% and most do charge the limit, so in essence, the sales tax rate is 8.25%. Who is better off, CA or TX?
Texas does not have a state income tax, so the dollars being taxed for the rest of Prop 30 wouldn't apply to Texans as they have raised the tax base different amounts at different income levels. HOWEVER, Texas property taxes are significantly higher than property taxes in CA. In many of the main cities like Dallas, Austin, San Antonio, and Houston, property tax rates can be over 3%. Where I live in Bee Cave, just West of Austin, my tax rate is 2.02% which is about the lowest in the area. Many surrounding communities have rates up at 2.8, 2.9, and even 3.1%. When I lived in Dallas, I recall some of the rates to be 2.2, 2.4, and 2.8%. I know many of the Houston tax rates are around the 3% mark as well (Just to clarify, when I say the main city names, this includes the surrounding suburban areas). Your property assessed value can increase every year meaning more taxes each year. Also, in Texas, we have a Homestead Exemption which will lower your taxable value on your home, so that equates to a lower property tax than the stated numbers.
I tell you this because I understand CA has property tax rates about 1.25% and they're locked in when you buy the house, so the taxable value of your home can't increase (Please correct me if I'm wrong, but this is what many of my clients have told me). This means that you might be upset about your income tax rate increasing, but you can't just offset that number thinking you'll be better off buying a house in another state. Run the number$!
One of the bigger numbers to run is that if you have a $1M house in California, you could probably get what you're looking for in under $500k in most areas of Texas. Many of my CA relocation people buy houses around the $300-350k price point. With that, you're saving a lot on mortgage payments, and the higher property tax rate is based on a lower taxable value. These are ways you save money, not just jumping ship because of a tax on income.
Run your numbers in real-world scenarios and if they make sense, pack your bags, welcome to Texas and contact me as I'll be happy to help you with your move. If the numbers don't make sense, you might save more by not having to pay movers to pack and move your things thousands of miles. Austin was recently named the Fastest Growing City in America for the third year in a row, so we will welcome you with open arms.
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*California's Proposition 30 Making People Move to Texas?* was first published on donnahomesblog.com.