auston taxes (Houston, Austin: sales, apartment, renters)

[schil]

My family member is leaving Austin to a more reasonable tax state. somehow it does not seem fare that the homeowner is responsible for the bulk of the taxes, and they are not too far off from my home state on the east coast.
Has anyone else noticed this?
Is the rest of the state this expensive?
How are homes in the downtown areas selling recently? Have they held their value? The home is near westlake schools.

[sinking]

Renters still pay property taxes. They just come in the form of a high rent bill.

Because each state taxes differently some states will be advantageous and some will be disadvantageous for each individual. For me, Texas taxes take a higher percentage of my pay than if I was living in the same value house making the same amount where I moved from in Massachusetts. Fortunately I cannot afford to buy much so I am not hit with much for the states/counties/cities high sales tax.

Typical Texas response: But theres no state income tax!
Great. If I ever get a 30% raise I will just barely start to appreciate the no state income tax.

[Trainwreck20]

Because each state taxes differently some states will be advantageous and some will be disadvantageous for each individual.

^^This. My family pays the equivalent of a 3.1% income tax, except we pay it as a property tax. OTOH, if my wife suddenly quit her job, we would be paying the equivalent of a 6.8% income tax. The tax structure here is favorable to two-income families in modest houses, and unfavorable to single income households..especially those in more expensive houses.

[jobert]

Originally Posted by Trainwreck20

..especially those in more expensive houses.

^^This.

No one forced to live in an expensive house. I would rather be penalized for the price of my house rather than my salary. If people would use common sense, and maintain a 2:1 property value-to- yearly income ratio, then we would have nothing to complain about. You may say "if I lose my job, I will still have to pay taxes on my house"..well, if you lose your job in a place like Boston or Seattle, you'll still be on the hook for rent or mortgage on a house that could be twice as expensive because of the lack of property taxes anyways, so you're still in the same boat, but on the hook for less principle tied to the house in Texas, as opposed to a state with little or no property tax.

I like property taxes, they are a tax on consumption, not production, as a income tax would be. Income tax is on the front end, and deprives one of the freedom of choice on how they spend your hard earned money.

[sinking]

Originally Posted by jobert

]^^This. No one forced to live in an expensive house. I would rather be penalized for the price of my house rather than my salary.

What about lower income people such as myself who can't buy a cheaper house because they don't exist. I have bought about the cheapest house that wouldn't require constant repairs that would offset the savings. One might argue that I could rent...but my PITI on a 3/2/2 is about the same as a one or two bedroom apartment in a decent area.

So what it boils down to is I can't get much cheaper but I am effectively being taxed at a higher percentage of my income than people who can afford it easier.

[Trainwreck20]

There are lots of other factors than what is just on the surface. A back-of-the-napkin calc shows that the PIT + the private mortgage insurance (PMI) for a $140,000 appraised house taxed at 2.5% is about the same as the PIT+PMI for a $175,000 taxed at 0.5%. I have no idea what property tax rates are elsewhere, but many, if not most, states tax at SOME rate, so this seemed like a good guess. I also assumed the 15k HO deduction for simplicity, but you could have just used a slightly lower rate. PMI is assumed to be a percent of the loan.

Not included is insurance, since rates seem to go up somewhat as values go down, so I am assuming it would be a wash, although I am sure some areas would come out higher or lower. It is just hard to say w/o specifics.

Finally, you can essentially deduct two state taxes from you fed taxes, so most states get to deduct their state income tax and their (minimal) property tax, but since there is no income tax in TX, you get to deduct your property tax and sales tax. That is a few 100 dollar value off of your fed taxes compared to many other states.

[Tam883Iron]

No, other cities in Texas are not as expensive.

It's funny...when I was growing up back in the 60's and 70's, and even in the 80's, Austin was THE cheapest place to live in Texas. Now it's the most expensive in Texas.

When I moved here from Houston in 1986, I rented a huge old vintage 2 story home in Travis Heights for $150 a month. Then I though my 2nd rented house was very expensive, since it was a tiny one-story 2-1 on E. 50th St. just east of Airport Blvd and I had to pay $295/month.

[kiacook]

I like the high property taxes because it keeps home prices low and ensures people aren't taking on more mortgage than they can afford. I'm sure it's one of the reasons Texas wasn't as affected by the recent mortgage crisis.

[pjoseph2]

Auston taxes

[je4xff]

Originally Posted by sinking

What about lower income people such as myself who can't buy a cheaper house because they don't exist. I have bought about the cheapest house that wouldn't require constant repairs that would offset the savings. One might argue that I could rent...but my PITI on a 3/2/2 is about the same as a one or two bedroom apartment in a decent area.

So what it boils down to is I can't get much cheaper but I am effectively being taxed at a higher percentage of my income than people who can afford it easier.

Not to mention retired people on a fixed income who have been paying year after year of ever-increasing taxes on personal property they purchased 30-40 years ago.

Originally Posted by jobert

I like property taxes, they are a tax on consumption, not production, as a income tax would be.

I'd consider it a consumption tax if it was a one time thing, like sales tax. Even if it was an enormous one-time consumption tax of 25%-50%, it would still be far less than the amount of tax you actually pay over the course of a 30 year mortgage (based on the high property tax rates in Texas).

As long as property taxes are perpetual, until you die or go homeless, property taxes are more akin to a "wealth" tax.

Should I be taxed on my pants and shoes every year that I continue to wear the same pair? Same thing for my car - been driving the same car for 10 years now. Should I be taxed every year that I continue to use it?

I'd prefer the property taxes to be a bit lower, and offset with other types of taxes, even an income tax. Once I'm retired, my income tax rate will be lower, but my property taxes will be much higher because of increasing appraisals over time. Once I'm retired and have paid off my mortgage, I'd like to live a frugal life where I'm not paying a high "rent" to any entity, including the government. That's essentially what property taxes are - our lease from the government, even though we "own" the property. Fairly similar to the Feudal system.