Austin TX Real Estate - Hill Country Austin Lakeway Homes for Sale: California's Proposition 30 Making People Move to Texas?

California's Proposition 30 Making People Move to Texas?

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.

moving to austin tx population growthHere'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.

**Are You Packed Yet?**

donna harris Realtor Austin TX blog

Donna Harris, REALTOR®
RE/MAX Austin Skyline
www.DonnaHomes.com
Donna@DonnaHomes.com
austin-texas-homes-for-sale.com

Austin TX Real Estate

and the surrounding areas of Lakeway, Bee Cave, West Lake Hills, Cedar Park, Round Rock, Spicewood, Circle-C, Steiner Ranch, and everywhere in between... Hill Country Austin TX Real Estate and beyond. Whether you're buying or selling an Austin home, I'll be with you every step of the way. 

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Copyright© 2013 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
*California's Proposition 30 Making People Move to Texas?
* was first published on donnahomesblog.com.

Comment balloon 22 commentsDonna Harris • February 02 2013 07:55AM

Comments

Interesting, Donna. There is a lot of info in this blog--curious if Phil Mickelson has contacted you yet?! Have a great day!
Posted by Jane & Garry Smith, ABR, GRI, Realtors - Portland, ME - (207) 253-3195 (Coldwell Banker Residential Brokerage) almost 7 years ago

Excellent, Donna.  It's always about the numbers, but a lot of folks don't look at all of the numbers.  This is a great broadview of what to think about before moving.

Posted by Mike Cooper, GRI, Your Neighborhood Real Estate Sales Pro (Cornerstone Business Group Inc) almost 7 years ago

Florida is seeing an influx of Californians due to Prop 30 and the new 2.3 Obama Care sales tax.  When is just a little tax too much? When it causes people to dramatically change their lifestyle.

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (HomeSmart Realty West & Geneva Financial, Llc.) almost 7 years ago

What great information to have. Please keep me updated.  Jim

Posted by Jimmy Faulkner, The Best Of St. Augustine (Florida. Homes Realty & Mortgage) almost 7 years ago

Lots of good information here for possible transferees from California.  Things aren't always as they seem and running the numbers first is essential.

Posted by Margaret Goss, Chicago's North Shore & Winnetka Real Estate (Baird & Warner Real Estate) almost 7 years ago

My CPA was telling me this week that one of his client's California tax bill jumped from $16,000 to $85,000 because of Proposition 30; I notice he didn't mention my potential liability but he said it will hit next year. We voted for it anyway because we need it. Hey, I hear the thing about Texas is Austin is an oasis apart from the rest of the state. :)

Posted by Elizabeth Weintraub Sacramento Realtor Top 1%, Put 40 years of experience to work for you (RE/MAX Gold) almost 7 years ago

Texas has VERY high homeowner's insurance too. I think the HUGE advantage Texas has over California is affordable housing for the incomes. Phil Mickelson the golfer has been complaining about California's taxes lately too. Austin's popularity has also been its downfall with the huge population increase over the last ten years. Drive down I-35 in the daytime and it is still jam packed. Everyone has to look at the tradeoffs on all these things and see what they can live with.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) almost 7 years ago

Hi Donna,

I've read that Washington State is the No. 2 beneficiary behind Texas in the California out-migration; for most of the same reasons (our Critters are smaller, however!).  An additional option our Clark County residents have is a quick hop over the bridge to Oregon and there won't be a sales tax on most purchases.  In sum, people clearly are willing to change their behavior and where they live when taxes seem more reasonable in another locale.

Posted by Alexander- Slocum, Realty Team- Vancouver WA Real Estate (Premiere Property Group, LLC - Vancouver Washington) almost 7 years ago

Higher is not the answer for the local government of the Federal Government for that matter. It is well known that many have fled New York and Now California because of one reason, TAXES. Back to your post the one thing you did not mention is that with income tax 100% of the income is taxed, much different then a sale tax that only taxed when you spend. So if you save your money you can avoid the tax. Seniors trying to live off their pensions hate to see what left after taxes.

Here in sunny South Florida, Sales Tax is 7%, no State Income Tax and property taxes here average around 1.5%. One of the reasons a famous Conservative talk show host from New York now calls Florida home.

Posted by Chuck Mixon, Cutler Bay Specialist, GRI, CDPE, BPOR (The Keyes Company) almost 7 years ago

Hi Donna - Prop 30 absolutely has wealthy Californians looking to move out of state. It is not the increased sales tax but the increased income taxes (also part of Prop 30) that is making people consider a move - approx 3% additional at the highest brackets. With that said property tax is brutal in TX but taking into account that there is no state income tax I am not surprised that moving trucks are headed your way! Thank goodness our weather is perfect! Regards Dave

Posted by David Grbich, Orange County Real Estate - 949-500-0484 (Realty One Group - www.FindCARealEstate.com) almost 7 years ago
While Proposition 30 may be sending folks into a tailspin, I won't be moving to Texas. I dot like tornadoes and I dot like "electrical storms". LOL. I will just stay here in Cali and shake rattle and roll earthquake style.
Posted by Jean Hanley, Specializing in Folks Who Want To Buy/Sell Homes (Coldwell Banker Kivett Teeters) almost 7 years ago

So much data to consider!  I suppose it would all depend on the indiviual person, say, if they have a fixed income, are still working, plan on carrying  a mortgage, etc.

 

Posted by Catherine Ulrey, Equestrian and Acreage Property Specialist (Keller Williams Capital City) almost 7 years ago

I live in CA.  Quite frankly, I have not come across one tax refugee in my talks with people.  It will be interesting to see when the dust settles how many actually changed their domicile to Texas or any other state.

Posted by Gary Frimann, CRS, GRI, REALTOR and Broker (Eagle Ridge Realty / Signature Homes & Estates) almost 7 years ago

I  moved from California three years ago because of high taxes and high cost of living...the state is broke and yet it provides taxpayer dollars for gender change operations to residents (about $75,000 each). Many people that I know are now considering leaving and most site Washington, Florida or Texas as likely landing spots. Washington is no bargain either an dlikely to get worse but still a lot better than California

Posted by Paddy Deighan JD PhD, Paddy Deighan J.D. Ph.D (TimeshareLawyers.pro) almost 7 years ago
Donna - The assessed value on a home in CA can, I believe, go up 2% per year if the value has increased. It still seems to me the taxes would be less even with higher property taxes in TX when factoring in the lack of income tax.
Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) almost 7 years ago

Hi Donna, Well you certainly got the jist of it right. The base property tax rate is 1.124% plus any particular bond issues that add to that, bringing the average property bill to 1.25% of the purchase price. We also have a lot of areas with a Mello Roos Tax that is a special bond put on each property by the developer of the  subdivision that pays for the streets , schools, parks, etc. That can be anywhere from 1/4 of a percent add-on to a full 1%. But the actual tax bill does increase every year by 2% of the dollar tax amount each year. This was to be an under certain appreciation circumstances and it seems in the last 25 years I have lived here, those certain circumstances have applied, LOL. Sales tax is approx 8.25% plus any add-ons agreed to by any local city government. Ours is 8.75%. Income taxes for the well healed very well could have the effect of chasing the high earners, especially athletes to other states like TX, Nevada and Fla. With a good 1/3 of the population on the government dole here ( local and state gov jobs, food stamps, Section 8 housing, you name, they aren't so much bothered by any tax increases, in fact they are the ones that keep supporting the majority party to keep all the entitlements coming. Prop 30 may be the straw that breaks the camels back but there is more to come. The very reason for the lower property taxes is Prop 13 and with a veto proof majority, the party ( actually there is only one) is taking about changing things that will derive more tax revenue from property taxes. 

Posted by William Johnson, Retired Real Estate Professional (Retired) almost 7 years ago

I've had several young Silicon Valley couples move to Austin for lower priced housing.  Tech companies have often struggled recruiting young talent to Silicon Valley because of high home prices.  It seems to me most CA go to neighboring states--Oregon and Arizona, and to CO although many CA like TX for investment property because cash flow is better than it is here.  Rents never kept pace with rising home prices.  I think most native coastal CA (from San Diego to San Francisco) will pay more in taxes because of our climate.

Posted by Lloyd Binen, Silicon Valley Realtor since 1976; 408-373-4411 (Certified Realty Services) almost 7 years ago

I see your point, but life is CA is altogether better than many other places on Globe. I rather be here ...

it's only in the head in my view. There was a time we paid 18% interest rate for buying a car, it is almost negligible these days. Come back everyone (otherwise I will be the only one paying the new taxes)

Posted by Deepak Chauhan, Irvine, CA ... the place to be (Versailles Property) almost 7 years ago

This is a great post. All that info made my head spin but I learned something too!

Posted by Sussie Sutton, David Tracy Real Estate for Buyers & Sellers (David Tracy Real Estate) almost 7 years ago

I understand not "that" large of a percentage would jump ship because of the taxes, but many have as I hear it often when I get another CA client relocating here. It happens, and it will continue to happen. I just want people to run their numbers to make sure it's the best decision for their situation and not just because it worked well for a friend they know.

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) almost 7 years ago

Donna

Great post.

Yes, our Liberal Loons in Sacramento as they are often called pulled a fast one over the Voters again.

Even " Moon Beam " Brown, our Governor was in ads touting this was to " Save the Schools " by passing Prop 30 in the November ballot.

Comes to find out after the election, not even a third of that money will be going to the schools, so our schools will still be having issues.

The money according to local broadcast sources indicate that most of it will be used for CA employee payroll and the out of control Pension benefits that so many of our State, Local, and County governments need to pay for pension benefits that are three times the norm in the public sector.

Get ready for the rush into your state.

Thanks for your post.

Posted by Wayne L. Brown (Franklin Advantage Inc.) almost 7 years ago

Prop 30 has a little help on it's side.  Governor Rick Perry has been on our televisions in a commercial trying to recruit California companies.  Kinda funny.

Posted by Jean Hanley, Specializing in Folks Who Want To Buy/Sell Homes (Coldwell Banker Kivett Teeters) almost 7 years ago

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