Capital Gains / Income Tax? (Seattle, Vancouver: sales, 2015, appliances)

[elgrem]

Hi - been lurking for a couple weeks and really appreciate all the great content on here.

We're a family with 3 young kids contemplating a move up to Vancouver / Camas (potentially by the end of the year!) from the SF Bay area.

While we are definitely looking for a new adventure, we also have tax implications that we are thinking about.

I came across this article

https://crosscut.com/opinion/2020/04...ded-income-tax

It seems like a change in the Capital Gains tax is possible? My accountant hadn't heard of it but would love some feedback from this group.

We're really excited about the area but would hate to have to move again if things change.

[StealthRabbit]

This article is a political op-ed, so not too likely.
This author clearly displays their personal agenda. (which is not commonly shared)
(many yrs of threats to tax changes with no merit for past 40 yrs) Not that WA does not need to be improved.

However, Californication is alive and well in all the 10 'other' western states without Prop 13. (WY, MT and CO have been hit the worse, due to extreme culture shift along with equity inflow)
Changes WILL happen. Our family has had to leave (3) farms due to taxation. (Farms are very painful to leave after investing 10+ yrs in building soils, infrastructure, orchards... and needing several semi-trucks and 1+ yrs to move everything. ). Tens of thousands of lifelong community building seniors in PNW have been displaced due to Taxation burdens. (Influx of equity from outside PNW distorting valuations)

We were property taxed out of Colorado in the 1970's due to CA equity inflow.
Our WA property taxes have increased from $800 / yr to $14,000 due to CA equity inflow (same home just older and more worn out) No prop 13 outside of CA. Thousands of my CA coworkers did very well by retaining their Prop 13 homes, moving to WA, Retaining their higher CA wages during earning yrs (Our company felt sorry for them having to relocate to PNW so let them keep their high wages and dropped the ranking of local wage earners so CA immigrants could fill all the top pay spots and not have to take a cut in pay). Local employees did not get raises for up to 10 yrs so CA wages could be retained. Then... the CA employees retired and went back to their Prop 13 homes. Sweet deal.

[texasdiver]

Who knows. Politics in this state are constantly evolving and who knows what things will look like in 10 or 20 years.

I do expect the state to increasingly lose patience with Vancouver and Clark County because this region is a giant suck on state resources because so many Clark County residents evade sales taxes by shopping in OR. According to state data, Clark County takes in nearly $400 million more in state revenues than it generates due largely to sales tax evasion. https://ofm.wa.gov/sites/default/fil...s_revenues.pdf Puget Sound residents are eventually going to lose patience with subsidizing Clark County tax evaders as this county continues to grow. Some form of income tax is the only way to address that.

I do expect at some point there will be a top-to-bottom overhaul of the WA tax system. But when that happens and what the end result will look like is sheer speculation.

[MechAndy]

Hi,
I grew up in Lafayette and I am moving to Washington.
I hope you like it.
Andy.

[MechAndy]

I have no reply about the taxes though.
We use somebody smarter than us on this and pay them well.
Be very leary about any internet forum tax advice is the only thing I can offer.

That said,
Get ready to meet a bunch of others that came from California.

One of our Washington neighbors is actually one of our Danville CA neighbors.

3 people that my daughter went to high school with also live very close to us.

One of my co workers bought a place 10 miles away.

We actually know about a good half dozen folks from California that live not far away from us in WA.

Good luck to you.
Andy.

[StealthRabbit]

Originally Posted by MechAndy

Hi,
I grew up in Lafayette and I am moving to Washington.
I hope you like it.
Andy.

We had no choice 40 yrs ago when the damage started and locals were displaced. Since then we have had upward of 300 transplant families per month to our SW WA county.

Most of the damage was done pre 1997 (Tax changes to primary residence exclusion)

For many yrs my CA coworkers spent 2-3x market rates just to exhaust their capital. Adding basements, pools, additions to 'spend' (raise valuation and property taxes).

CA could have solved our problems and theirs by only allowing the equivalent of USA average home price to flee CA. the rest could have stayed in CA or be taxed. Those thousands of coworkers from CA that kept their excess equity invested in CA are very happy and wealthy investors. A 96 YO friend was still getting income payments in 2015 from his commercial building in LA where he sold the business and not the RE, and moved to Colorado in 1963. Was a tidy $20k / month income to assist his retirement. His estate liquidated it in 2018 for a couple million$.

All are welcome in WA.

The locals just end up working 1+ week / month for the needed income to keep that invitation open.

[elgrem]

Thanks for the responses! I really do appreciate it and it adds a lot of color.

@StealthRabbit - we are definitely sensitive to the Californication and understand the implications. It really is a broken system and candidly I do feel guilty about being part of the problem. The toughest part is figuring out what's best for the family at this point in time. For what it's worth, my parents are avocado farmers in Temecula, CA and are feeling the brunt of not just water restrictions but also encroaching housing.

@texasdiver - thank you for the background. We looked at the Seattle area but just liked the Portland / Vancouver area better. Didn't even really think about the sales tax but that does make sesne.

@MechAndy - great to meet you! I usually tell people I'm from Walnut Creek just to cut down on the Lafayette, LA confusion. I guess Vancouver, WA will have the exact same issue. I am really excited to hear that there is such a strong contingent up there. We're looking forward to integrating into the scene but love the idea of also having expats around. Hopefully, will run across you guys after we make the move!

I am meeting my accountant next week to figure out a plan. Hopefully, you all won't mind if I ping the forum on neighborhood advice once we figure out our timeline?

Thanks so much!

[Mossa]

Originally Posted by texasdiver

Who knows. Politics in this state are constantly evolving and who knows what things will look like in 10 or 20 years.

I do expect the state to increasingly lose patience with Vancouver and Clark County because this region is a giant suck on state resources because so many Clark County residents evade sales taxes by shopping in OR. According to state data, Clark County takes in nearly $400 million more in state revenues than it generates due largely to sales tax evasion. https://ofm.wa.gov/sites/default/fil...s_revenues.pdf Puget Sound residents are eventually going to lose patience with subsidizing Clark County tax evaders as this county continues to grow. Some form of income tax is the only way to address that.

I do expect at some point there will be a top-to-bottom overhaul of the WA tax system. But when that happens and what the end result will look like is sheer speculation.

But as the county continues to grow, so do grow property tax revenues. And there are pretty healthy increases to those in Washington, especially with growing taxable base. And more people means more businesses, which is also better for tax revenues. Bulk of small ticket items, and increasing online shopping still generate sales tax. Is lost sales tax on some furniture, appliances and electronics really that critical? Logically thinking, seems like it is better to leave this particular apple cart alone.

[182pilot]

In my opinion, for whatever that is worth, I think a third bridge is infinitely more likely. Changing an entire tax structure of a state is a monumental undertaking. Seattle may go their own way but that is a far cry from the state as a whole making a similar move.

As someone who moved from the East Bay recently as well, Welcome! Don't let Stealth scare you off with the spooky tales of anti California bias. In Camas I haven't noticed it at all. Every third person seems to be from California and we all have one thing in common, we left!

One thing to keep in mind with Vancouver/Camas is that we are too close to Oregon to have good shopping on our side of the river. If you, your significant other or kids like shopping at actual stores, be prepared to be driving a bit. It's not like hopping on 24 and 5 minutes later you're at Broadway Plaza. The other thing is that the Mexican food (pre-covid when we still went to restaurants) is marginal at best. It will make you miss El Charro, if you can believe that.

[StealthRabbit]

WA DOR can get CC receipts, or lobby to have CC companies report OR purchases of WA residents. Pretty simple, and what happens in an audit.

Since I have commercial (retail) tenants in WA border region, I know their pain on lost revenue to Oregon sales. And with new inclusion of OR residents must pay WA tax (and claim back separately if desired), tough retail market in WA border regions.

We have the technology to very easily solve this.
Just do it.