If you came to Austin from another state where you paid income tax, but had a cheaper property tax... (pay, federal)

[atxcio]

Also keep in mind that as the appraisal values have gone up, many tax rates have gone down. I think they have to, by law, or they have to notify you of the "effective" tax increase. That notification might just be an ad in the newspaper, though.

Bottom line: the rate in the City of Austin is lower than it has been in quite a while. It's 2.155% right now. Some areas of eanes are as low as 1.889%!

[TexasHorseLady]

We do claim our property tax on our federal income tax, and it does make some difference.

The thing to remember is that you pay, one way or another, whether the tax be property or income.

[atxcio]

Quick question: I think you can claim a deduction for property tax on your income taxes. Because Austin has outrageous property taxes, are you seeing any of that money come back to you in your income tax deductions? Does the higher property tax act as a good federal income tax shield for you than it would in other states where property taxes are more down to earth?

Yes you can deduct it, and yes it can make a big difference in your refund (if you are getting one) or the taxes owed. The biggest benefit it obviously if you are making a bit more and could go down a tax bracket through the deduction... however, as people correctly point out, this benefit is effectively lost if you are retired (unless you are making some big money on stocks or something).

It just stinks that your property tax increases every year instead of staying locked for what you bought the home for.

It doesn't increase every year. Sometimes it stays the same or goes down. Mine went down about $1200 this year, even though my house was appraised a little higher.

You just have to be prepared, because it _could_ go up every year.

[austifornian]

Originally Posted by wsugrad03

We're looking at moving to Austin from Seattle. Quick question: I think you can claim a deduction for property tax on your income taxes. Because Austin has outrageous property taxes, are you seeing any of that money come back to you in your income tax deductions? Does the higher property tax act as a good federal income tax shield for you than it would in other states where property taxes are more down to earth?

There is a benefit to this. For federal returns you have the choice of taking a deduction for state income tax OR state sales tax (but not both) so in states where there is no income tax it is a net gain on your federal tax return.

It just stinks that your property tax increases every year instead of staying locked for what you bought the home for. I would rather pay income tax in this case. People have been talking about wanting to establish a cap? Does anyone think this will happen anytime soon?

There is a cap, it's just that the cap is high, 10% which in a strong market like Austin can be challenging. For the vast majority of Texans it is not really an issue and in any event change happens slowly here. The easiest way to control your taxes is to not buy such an expensive house (which in beats taking a job a Taco Cabana as a form of tax protest)

My only complaint about the system is that in certain instances, property tax can price people out of their homes or off of their land.

[gimme it]

Can someone comment on the cost of living in Austin? Sales tax? Gas prices, food taxes, things like that?

[austifornian]

All things considered, I think the overall cost of living here is less than in CA. Tax wise for me its a wash, but all of the expenses work out lower. The comparative lower property values seem to translate into lower prices as merchants pay less rent. Coming from the Monterey Bay the only thing I pay more for here are artichokes, strawberries and garlic

[Southern Phoenician]

I recommend collecting as much information as you can and do a comparison. Visit the HEB grocery store and make notes on how much food costs for comparison. Figure out a home price range you expect to pay and get an estimated property tax %. Take into considering salaries (you may change jobs at some point), childcare costs (if applicable), schools, HOA fees, utilities, and gas (commuting). There are so many variables that can affect your bottom line.

I find that I'm spending more here on groceries, gas, & entertainment (lots to do!). Property taxes are outrageous but I sock the money aside into a savings account earning over 4% interest and pay it myself instead of paying through my mortgage.

[gimme it]

Originally Posted by Austin Newby

I recommend collecting as much information as you can and do a comparison. Visit the HEB grocery store and make notes on how much food costs for comparison. Figure out a home price range you expect to pay and get an estimated property tax %. Take into considering salaries (you may change jobs at some point), childcare costs (if applicable), schools, HOA fees, utilities, and gas (commuting). There are so many variables that can affect your bottom line.

I find that I'm spending more here on groceries, gas, & entertainment (lots to do!). Property taxes are outrageous but I sock the money aside into a savings account earning over 4% interest and pay it myself instead of paying through my mortgage.

What state did you come from?

[TexasHorseLady]

Can someone comment on the cost of living in Austin? Sales tax? Gas prices, food taxes, things like that?

I noticed on another thread that you're coming from NYC. My son recently moved back to Austin after living in NYC for some years, and we did some analysis and also used CNN's cost of living comparison calculator.

Just for easy figuring, if you needed a $50,000 salary in NYC, in Austin you could get by on $32,908.41. Now, there's LOTS of variables that would impact that for a specific individual, but, for what it's worth, there it is.

[Southern Phoenician]

Originally Posted by gimme it

What state did you come from?

Arizona. I lived in Phoenix.