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Are CA property taxes higher than Texas? This article says the effective tax rate in Texas was almost double that of California’s two years ago:https://taxfound

Are CA property taxes higher than Texas? This article says the effective tax rate in Texas was almost double that of California’s two years ago:https://taxfoundation.org/how-high-are-property-taxes-your-state/ https://taxfoundation.org/how-high-are-property-taxes-your-s...

briandear 9y ago
An interesting thought though.. if a 3 bedroom house in Cupertino costs $1.7 million and an equivalent house costs $250k in a Houston suburb. Then the property tax in Cupertino will be vastly higher for the same amount of space. While that higher housing cost is offset somewhat but a higher salary, that higher salary also lands you with a higher income tax bracket and overall tax bill, which means at the end of the day, your standard of living, your disposable income is vastly lower in the Bay Area vs. Houston. You could argue that Cupertino has better schools on average, but then again for the income differential, you could afford Houston’s best private schools and still come out ahead financially. The only objective reason to live in SV is because you are required too — you work at Apple, Google, etc. If you are a startup locating to locate somewhere, it’s a fallacy that you have to be in the Valley. If your business is worth funding, being near Sand Hill is unnecessary. The ‘money’ is located in the Valley for sure, but remember those guys writing the checks aren’t paying the same kind of taxes the employees are. While the people that actually have to work at your startup are just scraping by despite the high salary. I ran the numbers and it would be cheaper for me to live 2 hours from Cupertino, buy a Cessna and commute via 20 minute flight each way than to live within 20 minutes drive — that cost difference includes buying and maintaining the airplane, hangar costs as well as a cheap car kept at te Reid airport in San Jose. Even having to drive occasionally due to weather makes that idea still more reasonable. A standard engineer salary in the Valley isn’t enough to buy a house unless you win the equity lottery or save for 10 years for a down payment. Anywhere where housing is 40-50% of salary plus high taxes is a recipe for disaster — regardless of how many electric car charging stations or trains their might be. Obviously this is a tangential issue to taxes, however it’s still a vital part of the calculus of being in SV. I just wish I could commute to Nevada as that would be a huge savings, but a bit of a stretch for a twice daily Cessna flight.
- usaar333 9y ago
  California limits property tax annual appreciation however. Many of these "star scientists" in CA might have bought 30 years ago and have a property tax assessment on their $1.7M house of $250k.
  - SOLAR_FIELDS 9y ago
    From talking to coworkers there is such limitation but only to the point that it can only go up 2% per year. I am guessing there is no other type of cap? In Texas such cap exists for people 65 and older where their tax rates are frozen in perpetuity. Does such cap exist in CA? So putting aside inflation and the like, assuming value held constant wouldn’t taxation property values “catch up” after many years? Or are there other factors at play besides the 2% limit?
    - inferiorhuman 9y ago
      Look up Prop 13 and Prop 8, it's essentially rent control for property owners. Property tax cannot exceed 1% of the assessed value, and the assessed value cannot increase more than 2% a year. Prop 8 ensures that property taxes go down when the assessed values decline. The caps stay in place until the property changes hands. This applies to all property in California. Commercial? No problem. Second home? Same discounts. There's been talk about either abolishing or reforming Prop 13 via a split roll system, but it's a political third rail.
    - yonran 9y ago
      It’s common to see large disparities; from looking at a random street (Betlin Ave, Cupertino) there is a house with an assessed value of $67k while Zillow estimates its value at $1.7M. Assuming that inflation is ≥2% per year yet property values are held constant, it would take 164 years for the assessed value to “catch up” to market value. And the tax discount is not just for the elderly. Children inherit their parents’ low assessment. The tax only jumps up beyond 2% in a year when the owner renovates or sells the house. The tax rate is around 1.25% (limited by Proposition 13 to 1%, plus slightly more for infrastructure bonds). The low tax rate contributes to higher market prices. Proposition 13 is a very good system for property investors.

briandear 9y ago

An interesting thought though.. if a 3 bedroom house in Cupertino costs $1.7 million and an equivalent house costs $250k in a Houston suburb. Then the property tax in Cupertino will be vastly higher for the same amount of space. While that higher housing cost is offset somewhat but a higher salary, that higher salary also lands you with a higher income tax bracket and overall tax bill, which means at the end of the day, your standard of living, your disposable income is vastly lower in the Bay Area vs. Houston. You could argue that Cupertino has better schools on average, but then again for the income differential, you could afford Houston’s best private schools and still come out ahead financially. The only objective reason to live in SV is because you are required too — you work at Apple, Google, etc. If you are a startup locating to locate somewhere, it’s a fallacy that you have to be in the Valley. If your business is worth funding, being near Sand Hill is unnecessary. The ‘money’ is located in the Valley for sure, but remember those guys writing the checks aren’t paying the same kind of taxes the employees are. While the people that actually have to work at your startup are just scraping by despite the high salary. I ran the numbers and it would be cheaper for me to live 2 hours from Cupertino, buy a Cessna and commute via 20 minute flight each way than to live within 20 minutes drive — that cost difference includes buying and maintaining the airplane, hangar costs as well as a cheap car kept at te Reid airport in San Jose. Even having to drive occasionally due to weather makes that idea still more reasonable. A standard engineer salary in the Valley isn’t enough to buy a house unless you win the equity lottery or save for 10 years for a down payment. Anywhere where housing is 40-50% of salary plus high taxes is a recipe for disaster — regardless of how many electric car charging stations or trains their might be. Obviously this is a tangential issue to taxes, however it’s still a vital part of the calculus of being in SV. I just wish I could commute to Nevada as that would be a huge savings, but a bit of a stretch for a twice daily Cessna flight.

usaar333 9y ago
California limits property tax annual appreciation however. Many of these "star scientists" in CA might have bought 30 years ago and have a property tax assessment on their $1.7M house of $250k.
- SOLAR_FIELDS 9y ago
  From talking to coworkers there is such limitation but only to the point that it can only go up 2% per year. I am guessing there is no other type of cap? In Texas such cap exists for people 65 and older where their tax rates are frozen in perpetuity. Does such cap exist in CA? So putting aside inflation and the like, assuming value held constant wouldn’t taxation property values “catch up” after many years? Or are there other factors at play besides the 2% limit?
  - inferiorhuman 9y ago
    Look up Prop 13 and Prop 8, it's essentially rent control for property owners. Property tax cannot exceed 1% of the assessed value, and the assessed value cannot increase more than 2% a year. Prop 8 ensures that property taxes go down when the assessed values decline. The caps stay in place until the property changes hands. This applies to all property in California. Commercial? No problem. Second home? Same discounts. There's been talk about either abolishing or reforming Prop 13 via a split roll system, but it's a political third rail.
  - yonran 9y ago
    It’s common to see large disparities; from looking at a random street (Betlin Ave, Cupertino) there is a house with an assessed value of $67k while Zillow estimates its value at $1.7M. Assuming that inflation is ≥2% per year yet property values are held constant, it would take 164 years for the assessed value to “catch up” to market value. And the tax discount is not just for the elderly. Children inherit their parents’ low assessment. The tax only jumps up beyond 2% in a year when the owner renovates or sells the house. The tax rate is around 1.25% (limited by Proposition 13 to 1%, plus slightly more for infrastructure bonds). The low tax rate contributes to higher market prices. Proposition 13 is a very good system for property investors.