people who left CA to avoid state income tax - did it work out? (Houston: houses, elementary schools)

[Tslmdlx]

I'd like to direct the question specifically to those who left CA to move to TX for lower cost of living and save on income tax, did it pan out the way you had planned?

I'm running the numbers based on my income tax over the past 10 years and it is a non-trivial amount, in combination with the lower cost of housing with the decent sized amount of equity I would carry over. HOWEVER, there are a myriad of little gotchas that I've seen along the way that may or may not diminish the ROI of moving. "MUD" and "PID" taxes for example, on the financial side and the non-financial aspects do not even need to be mentioned.

Overall, please tell me (for those who have actually done it for the specific reason I suggested), if you are overall happy with your decision. Do you have any advice on what other pitfalls to look out for that you weren't aware of when making a financial evaluation?

[As Above So Below...]

I did move from LA to Dallas (and later to Houston) in 2010. It wasnt for tax reasons but rather we just felt priced out of there. The money we got back for not having to pay state tax was a bonus.

The pitfall to look out for is property tax. It is quite a lot more here than in California. There are also a lot more toll roads here but that isnt a big deal unless you live right next to one and have no choice but to use it.

Otherwise, the tax burdens here are much lighter than in California.

[Tslmdlx]

Originally Posted by As Above So Below...

The pitfall to look out for is property tax. It is quite a lot more here than in California. There are also a lot more toll roads here but that isnt a big deal unless you live right next to one and have no choice but to use it.

Otherwise, the tax burdens here are much lighter than in California.

thank you, that is great advice. I should've mentioned we have mello roos on our home here so it equates to be about the same for property tax unless you introduce MUD and PID which is what i'm trying to avoid.

[mastershake575]

Real kicker like stated above is property tax percentage but it's almost completely negated by the houses being way cheaper (technically the propery tax yearly amount is about the same because the houses are porportionally cheaper).

Burden overall is signficantly lower due to lack of state income tax

[BobPhipps]

Tslmdlx,

I happened to see your thread on the sidebar and thought I would chime in. I hope you don't mind as I'm not actually in Dallas but rather relocated to the Austin area.

I just had this same conversation on the California board and thought I would share some of my insights.

I am in agreement with Mastershake in that the property tax is definitely negated by the lower cost of homes. I tend to look to the metropolitan areas as those are the most populous. If you look at the NAR median home index, it's easy to see that homes in Texas will sell for roughly 1/4 of the cost of Northern California homes and maybe about 60% less than those in Southern California.

https://cdn.nar.realtor/sites/defaul...2020-11-12.pdf

One big plus is that homes come down dramatically in price in a fairly close proximity to city centers (at least that's the case in the Austin area). The home we bought is approximately 16 miles away for $315k. To have prices drop like that in the San Francisco Bay Area, you would probably need to be about 50 miles away. In that same proximity, we would easily be looking at a $1.3 million dollar home in the area of California we lived in. Starting property tax on that home would be $13,000. Our annual property tax for our home in Texas is just under $9,000. We were paying between $7k-$8k in state tax, and of course in Texas we pay none.

We did take approximately a 30% pay cut on income, but the cost of living for the area when you take all expenses into account is a drop of 50% from where we were living (it was essentially like getting a raise). So overall, we are quite pleased. and have found that we are able to save much more now that we are in Texas, which will set us up better for retirement.

[Tslmdlx]

Originally Posted by BobPhipps

I happened to see your thread on the sidebar and thought I would chime in. I hope you don't mind as I'm not actually in Dallas but rather relocated to the Austin area.

I should have put this thread in the Texas general discussion, not Dallas

[mastershake575]

Also if kids are a factor then price of schooling is a gigantic savings as well (amazing public schools is a big selling point for transplant families).

I know a ton of people from California that had been sending there kids to private schools but didn't have to once they moved because DFW has an abundnace of elementary schools that are top 3% in the nation and there's at least 20 public highschools in DFW that are ranking top 5% in the nation

[36183]

Just checked datausa and Zillow, the median household income in Mountain View is $128,252, which is slightly higher than Frisco's $127,133. Median house price in Mountain View is $1.8m comparing to $430k in Frisco. If you have a STEM job, unless you work for google, Apple (which probably support Mountain View's income), you probably don't earn much less in TX but pay significantly less tax in both property tax and income tax.

[75214Dad]

Originally Posted by BobPhipps

Starting property tax on that home would be $13,000. Our annual property tax for our home in Texas is just under $9,000. We were paying between $7k-$8k in state tax, and of course in Texas we pay none.

We did take approximately a 30% pay cut on income, but the cost of living for the area when you take all expenses into account is a drop of 50% from where we were living (it was essentially like getting a raise). So overall, we are quite pleased. and have found that we are able to save much more now that we are in Texas, which will set us up better for retirement.

You took a $45,000 pay cut to save $12,000 in taxes?! I took a 10% pay cut to move from NYC, but my take home pay stayed the same. mod cut

[Tslmdlx]

Originally Posted by 75214Dad

You took a $45,000 pay cut to save $12,000 in taxes?! I took a 10% pay cut to move from NYC, but my take home pay stayed the same. 30% is silly season.

If it's 30% paycut but 1/3rd the cost of housing and the $12k income tax as icing on the cake, imo that makes sound fiscal sense. 13k property tax = at least 1.3million property in CA