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We own a house, but have been considering selling it and getting an apartment, despite earning well north of that number in Texas, not exactly a high cost-of-li

We own a house, but have been considering selling it and getting an apartment, despite earning well north of that number in Texas, not exactly a high cost-of-living state. Financially, we might (or might not) miss out on some equity growth, but our expenses would be more steady. Instead of sporadic multi-thousand dollar repairs and a giant property tax check every year, we'd make a single monthly payment to replace both. Some months we would pay more than if we stayed put, some months we'd pay much less. In the meantime, an apartment would be much smaller, and so utility bills would decrease, too. Rent would go to maintain the shared pool rather me having to pay separately for that, too. In a state where property taxes weren't running more than $6k/year, the math might be different. We'd likely have moved already if we didn't have two electric cars.

yieldcrv 4y ago
Take a second look at California, people that can afford to live here don't really have to deal with "the high taxes". because you can also afford a CPA. and California property taxes are typically less than half of Texas. try having most of your annual earnings to be long term capital gains with some of your other unrealized long term gains donated to your non-profit. if you're just doing "income" and saving, taking no risk or spending, then don't take a second look at California. but if you can drive some Net Operating Losses in conjunction with capital gains and capital donations to non-profits, you really don't have to worry about income taxes anywhere, just the local property taxes, and those are much lower in California than Texas.
- lotsofpulp 4y ago
  Property tax rates might be lower in California, but nominal property taxes are dependent on when you purchased the property. If you purchase an $800,000 house in California in 2019, your property tax might be $8,000, similar to Texas's 2% property tax on a $400,000 house. The difference in California is that if you purchased property long ago, or inherited it, you pay far less than 2% of the market value in property tax. But that is not relevant for anyone looking to purchase a home, and generally, land in CA is much more expensive than TX, so I doubt there are any property tax savings by buying in CA.
  - yieldcrv 4y ago
    good point, in the other case that they still only to rent then they should look at the composition of their annual earnings and what they can do
- pwinnski 4y ago
  I lived in San Diego for many years, I'm aware of the trade-offs. My standard of living would decrease substantially if I moved back to California. Property taxes are much lower, but house prices for similar houses are much higher. In fact, property taxes are not typically less than half of Texas. I think you mean that property tax rates are lower, but given the difference in house prices, that doesn't work out to half. For example, WalletHub[0] says that California's median home value is $573,200, resulting in property taxes of $4,279 at a rate of 0.75%. In Texas, on the other hand, the rate is more than double: 1.75%! But the median home value is $202,600, so the taxes end up being lower: $3,520. In my case, home values in both cases would be more than double that, and so would taxes. To be clear, we own this house outright. At this point we could sell it and invest the proceeds in index funds, and cover rent entirely by withdrawing about 3% returns per year. After the first year, that would all be long-term capital gains, too. 0. https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585 https://wallethub.com/edu/states-with-the-highest-and-lowest...
dahfizz 4y ago
> our expenses would be more steady Don't you have a 30 year fixed-rate mortgage? The increase in rent every year over the next 30 years is going to be way more than whatever maintenance costs you have. Rent is "steady" in the short term, but every year you are exposed to market volatility and inflation.
- pwinnski 4y ago
  We own the home outright, no mortgage. The repair and maintenance expenses are sporadic and extreme. $6k here, $8k there, without warning. Rent increases are definitely something to watch out for, but in another six years we will no longer have any school-age children, and our ability to move around without regard for school districts increases dramatically. In 30 years, I will have exceeded my life expectancy at birth, although I hope to still be kicking, obviously. I will probably be retired in half that time. I've watched my parents end up in a house far too big for them after kids moved out, and they downsize to another house that ended up still being far too big for them. My willingness/desire to rent may be a reflection of my phase of life more than anything: when I was very young, I rented because I wasn't yet sure I wanted to be locked in somewhere for decades. Then I owned a house for decades until a divorce, rented while I figured out what my life was going to be like again, and now another marriage and another house, but my future looks like it will be a lot less locked in, a mirror of my youth. We intend to travel extensively, spending just shy of six months overseas. At that point we don't need to be paying expenses for a place in which we're not living.
  - dahfizz 4y ago
    Gotcha. If you own the house outright, I can see the appeal of selling and drawing on that principal to pay rent and buy the conveniences that come along with that

yieldcrv 4y ago

Take a second look at California, people that can afford to live here don't really have to deal with "the high taxes". because you can also afford a CPA. and California property taxes are typically less than half of Texas. try having most of your annual earnings to be long term capital gains with some of your other unrealized long term gains donated to your non-profit. if you're just doing "income" and saving, taking no risk or spending, then don't take a second look at California. but if you can drive some Net Operating Losses in conjunction with capital gains and capital donations to non-profits, you really don't have to worry about income taxes anywhere, just the local property taxes, and those are much lower in California than Texas.

lotsofpulp 4y ago
Property tax rates might be lower in California, but nominal property taxes are dependent on when you purchased the property. If you purchase an $800,000 house in California in 2019, your property tax might be $8,000, similar to Texas's 2% property tax on a $400,000 house. The difference in California is that if you purchased property long ago, or inherited it, you pay far less than 2% of the market value in property tax. But that is not relevant for anyone looking to purchase a home, and generally, land in CA is much more expensive than TX, so I doubt there are any property tax savings by buying in CA.
- yieldcrv 4y ago
  good point, in the other case that they still only to rent then they should look at the composition of their annual earnings and what they can do
pwinnski 4y ago
I lived in San Diego for many years, I'm aware of the trade-offs. My standard of living would decrease substantially if I moved back to California. Property taxes are much lower, but house prices for similar houses are much higher. In fact, property taxes are not typically less than half of Texas. I think you mean that property tax rates are lower, but given the difference in house prices, that doesn't work out to half. For example, WalletHub[0] says that California's median home value is $573,200, resulting in property taxes of $4,279 at a rate of 0.75%. In Texas, on the other hand, the rate is more than double: 1.75%! But the median home value is $202,600, so the taxes end up being lower: $3,520. In my case, home values in both cases would be more than double that, and so would taxes. To be clear, we own this house outright. At this point we could sell it and invest the proceeds in index funds, and cover rent entirely by withdrawing about 3% returns per year. After the first year, that would all be long-term capital gains, too. 0. https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585 https://wallethub.com/edu/states-with-the-highest-and-lowest...

dahfizz 4y ago

> our expenses would be more steady Don't you have a 30 year fixed-rate mortgage? The increase in rent every year over the next 30 years is going to be way more than whatever maintenance costs you have. Rent is "steady" in the short term, but every year you are exposed to market volatility and inflation.

pwinnski 4y ago
We own the home outright, no mortgage. The repair and maintenance expenses are sporadic and extreme. $6k here, $8k there, without warning. Rent increases are definitely something to watch out for, but in another six years we will no longer have any school-age children, and our ability to move around without regard for school districts increases dramatically. In 30 years, I will have exceeded my life expectancy at birth, although I hope to still be kicking, obviously. I will probably be retired in half that time. I've watched my parents end up in a house far too big for them after kids moved out, and they downsize to another house that ended up still being far too big for them. My willingness/desire to rent may be a reflection of my phase of life more than anything: when I was very young, I rented because I wasn't yet sure I wanted to be locked in somewhere for decades. Then I owned a house for decades until a divorce, rented while I figured out what my life was going to be like again, and now another marriage and another house, but my future looks like it will be a lot less locked in, a mirror of my youth. We intend to travel extensively, spending just shy of six months overseas. At that point we don't need to be paying expenses for a place in which we're not living.
- dahfizz 4y ago
  Gotcha. If you own the house outright, I can see the appeal of selling and drawing on that principal to pay rent and buy the conveniences that come along with that