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It certainly has to be a godsend for those who bought their home more than 10 years ago. Someone bought their house in San Diego in 2002 for $560,000 is paying a tidy sum a year in property taxes.
I remember there being a big push to cap or reduce property taxes in the city of Houston around 2004 or so. for this very reason. Property appreciation, in general, isn't as high in Houston but it can be in some specific neighborhoods (Eastwood, Houston Heights, Third Ward, etc).
It could be worse for them. They could be paying 3% like y'all do here .
It's the most logical and fair property tax system I know. Think about it for a second. A low, fixed property tax rate for all citizens. No nasty surprises. No ridiculous annual increases. By the way, this was voted in by the people of CA because they were sick and tired of high property taxes and arbitrary increases. Many people move out of CA because of the high cost of living. The biggest reason for younger people is they can't afford a house there. Property taxes have little to do with it. If anything is to be blamed, it's the high real estate prices. That, of course, is the result of supply and demand. That, of course, is capitalism at work. Pick your blame, but leave CA property taxes out of it.
BINGO! The only thing i would add (in Texas defense) is the School systems (benefit from high taxes) are much better here.
We lived in Tomball for 11 years then moved to San Jose, CA for 2 years then back again to Houston.
We sold our house here for 160,000. It was 2800 sq ft and in a good school district. We paid under 3% in property taxes but round if up if you like. That's $4,800. A similar house in the San Jose area started at $900,000 and went up very fast depending on the school district. Property taxes at 1% on 900,000 is $9,000.
Of course, moving to the same house was not possible. The homes in decent school district started around $600,000. That's 50 years old, 1600 sq ft. I knew families of 4 that lived in 1400 sq ft with 1 bath. So 1% on $600,000 is $6000, close but still more than our Texas home.
As for the fairness of appraising the homes by last sales price, this totally screwed up the supply and demand of homes further driving up the prices. People could not afford to move even if their home had appreciated because they could not afford the larger tax bill on the current price of homes. In our neighborhood about a quarter of the homes were owned by the original owners, that's over 50 years in the same house! It was very common for one family to be paying $8,000 - $10,000 in taxes and the people next door paying less than $1000. A house sold in our neighborhood because the owners passed away. The sons had the original document from when the home was built. It was priced at $11,000 and they had talked them down to $8,000. The sons sold the home for $850,000.
Funding schools was very unpopular. As we decided to leave, our district was closing 2 elementary schools because a proposition to fund them failed at election. The gifted program was discontinued. One day my daughter comes home from school and says they weren't getting any more math home work because they couldn't afford to make the copies of the work sheets.
The best public schools were run like private schools where parents were expected to pay thousands in donations to the school on top of property taxes just to make up for the shortfall of under-valued appraisals on homes.
If taxes are to high then adjust the Tax RATE but leave the appraisal value alone.
Having lived in a variety of states, I actually think the way that Texas does it's property tax is pretty good, all things considered. Valuations are done annually to keep up with market fluctuations, and though there is plenty of grumbling (surprise, surpise!) about valuations set by the state/county/city, such valuations are, at the macro level, pretty fair and reasonably accurate.
CA's system is awful. As another poster pointed out, it makes it very difficult to move and provides for enormous discrepancies in property taxes on similarly valued homes.
I have always thought that the biggest problem with property taxes in TX is that they are too high--such taxes do not take into account income, which would be more efficient. Folks who lose their job during a recession, for example, see their incomes slashed but their property tax bill remains very high. Not surprisingly, Texas has a high rate of people losing their homes during economic downturns and there's little question that high property taxes are a contributing factor to that.
The high property taxes also fall heaviest upon middle class/upper middle class folks who pay a high percentage of their income in property taxes. The wealthiest get off very easy. Yes, they live in more expensive homes, but they end up paying a much lower percentage of their income in taxes than middle class folks. Thus, a billionaire in Houston like Richard Kinder may pay something $250,000/year in property taxes on his $11m mansion in River Oaks. But $250K is a small percentage of his income, which is likely well over $10m. OTOH, a middle management schleb in The Woodlands making $100K/year has to pay 7.5% of his income ($7500.) in taxes on his $250K house.
A more efficient system would have a flat income tax, coupled with lower property and sales taxes. But I know that "income tax" is a very dirty word in Texas.
[quote=professorsenator;3399050] CA's system is awful. As another poster pointed out, it makes it very difficult to move and provides for enormous discrepancies in property taxes on similarly valued homes.
I would have to disagree with this...I would much rather know what my tax bill is going to be every year rather than be "surprised" year after year until finally forced to move. In CA you know up front that your rate is going to be 1.25% of purchase price and you can base your decisions on that, as far as not being able to move, they give the retirement age folks a one time chance to "carry" their old taxes with them so as to provide a means/way for them to move without getting crushed by a new property tax. What do they do in TX? They give them an extra 10 to 15K off of their school tax valuation. LOL, what does that do when all they have to do is raise the value of the home to compensate for it, it's all about them controlling the process so they can generate more $ when needed without having to go to the voters... I paid 100K for my home in CA when I bought it 20 years ago, my tax bill was $1300 per year up until the day I moved even though the house was worth 800K. Now the people who bought it from me at least knew they were in for a $10,000 tax bill. What would the taxes on a 800K home here be? Lets just say your work uniform better have your name on the back not the front.
Apples to apples, prices are comparable to other suburbs like Klein, Katy or Sugar Land, etc. The Woodlands is a bit more expensive while Kingwood is a bit less expensive. It also depends on the neighborhoods you're looking at. From a purely economic standpoint...in most Houston suburbs, competition and scarcity conditions play in favor of the consumer as A) there is a lot of competition with new communities and B) A lot of land left to develop. Add to this, the other factors such as cheap labor, lack of unions and development 'friendly' local governments.
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