Retiring: lowest tax burden Texas or Florida?

[Orchidflower]

Was wondering if anyone on this board ever did Turbo Tax or put paper and pencil to whether you get the best tax deal (aka lowest tax burden) as a retiree in Texas or Florida? Both have some outstanding benefits.

 

[ziggy29]

It varies. Texas is a great place (tax wise) if you have a strong income and a small, cheap home because of the combination of a high (percentage-wise) property tax rate and no state income tax. And the state sales tax rate is fairly high, but you are [-]cheap[/-] frugal and don't buy much "stuff" it's a fairly minor consideration.

On the flip side, if you have a modest income and a larger, costlier house, Texas is a tax hell as you derive little benefit from the lack of an income tax and you get creamed by the property tax.

One thing Texas and Florida have in common is some of the most generous asset protection laws in the country. Under most non-criminal circumstances, homesteaded personal residences, 401K plans and insurance policies (including annuities) are completely shielded from creditors and lawsuits. Oklahoma is similarly "good" from an asset protection point of view.

 

[REWahoo]

Orchid, I'm shocked you'd give any consideration at all to moving back to Texas.

http://www.early-retirement.org/forums/f29/why-do-retirees-move-to-maine-32197.html#post595696

 

[Orchidflower]

Yeah, I am, too, REWahoo....but dang! Texas has made it more and more attractive.
Maybe I'm just getting old and more forgiving of my experience in Texas? Nah....it's the great retiree tax deals Texas has now.

In the same vein, we had an old saying sales that went somewhat like: "They're (meaning the customers) all wh@res...and go for wherever they get the best deal" meaning no matter how good you are to a customer they will (usually) dump you for something cheaper. I guess, Wahoo, you can count me in that group now....haha!

Reread that post of mine. Still stand by what I said, tho....luckily, my speech patterns have stayed slowed down since leaving Texas.

And I still revere the Alamo defenders, too...REWahoo will get what I mean.

 

[ziggy29]

Maybe I'm just getting old and more forgiving of my experience in Texas? Nah....it's the great retiree tax deals Texas has now.

What deals are these, other than no state income tax and strong asset protection laws?

 

[Rustic23]

The ability to defer property tax at 65, and low property values (in some areas) make it appealing. In our subdivision you can buy a heavily wooded lot with all utilities for under $10,000. Or a home on the golf course for less than $100,000

YouTube - #16 Putter's Point, Waterwood

(I am not a real estate agent and I have nothing to do what so ever with this home) Admittedly it is at the lower end of the market, as there is a real nice home down the street from ours for just $750,000, it's boat dock is almost as big as our home!

Just saying when you look at property tax, it depends on the property values also, and overall Texas has reasonable values. Cost of things like registering a car or annual inspections are also cheap. I think my safety inspection is less than $20 a year. *higher in Houston.

On the other hand there are the snakes, spiders, gnats, mosquitoes, fire ants, and bubba.

 

[rescueme]

Taxes by State

 

[W2R]

I would like to suggest a possible approach to the problem that you can either take or leave (of course!). But anyway this being a discussion board here it is.

Since most people have more than one criterion for a retirement hometown, if income tax was a top priority I'd narrow it down to states without income tax (like Texas and Florida), and then look at both from a broader perspective. I'd pinpoint likely communities in both states and then visit them.

These are very different states. And the state that might have the lowest tax burden for one retiree, might not for another retiree depending on individual circumstances, where within the state they live, how they spend their money, how big of a house they intend to buy, and so on.

Sometimes I wonder if we do not see the forest for the trees. I know that is sometimes the case for me. In selecting a retirement location, we need to narrow it down to several and then visit to see if we actually LIKE the place. Can you see yourself living there? Do you look forward to your next trip to visit that community? Obviously taxes are important to you so I would identify a number of communities that seem to have pretty low taxes, and then I'd study other aspects of each one, travel to visit them and narrow them down, and keep learning about those that interest you most.

 

[MichaelB]

Florida property tax is heavily biased against new home buyers – except when they are able to buy at rock bottom prices – as it limits the yearly increase once the assessment has been made. Even with the housing price collapse it is still distorted.

Florida asset protection is quite good but an upper limit was implemented a few years ago in response criminals shielding their assets from legitimate creditors. Even Ms. Madoff tried. Still, for most folks it is more than enough.

I would imagine someone looking for a simple, low cost living alternative would consider both and look at cultural compatibility - or lack thereof.

 

[rescueme]

...as a retiree in Texas or Florida?

Lived in both - retired in neither ...

 

[MichaelB]

Both states are large and have a great deal of diversity - most folks should be able to find a location in one or the other that fits their needs.

 

[Eladio]

Lived in Texas for most of my life. Own property here. It is cheaper to live here than in other places (like Washington state, which we have lived in for five years and also has no state income tax), especially if you are cost conscious.

A couple of things:

Sales tax: 8.6% where I'm at (city, county, state). Not a big deal if you are frugal like most of us on this board are. If I'm planning on buying something, I comparision shop online and can usually find it and get it cheaper than buying it locally and having to pay the sales tax. I don't know about other states, but most food is tax free, plus there are sales tax holidays in August, before school starts, that give you the opportunity to buy clothes tax free. This helps out and we use it to our advantage with three kids and the both of us.

Property taxes: $2.06 per one hundred dollars of property value per my 2009 annual statement. Around $1800 per year for us for a large home on 25 acres in a rural area. At some point, when the kids are grown, we'll move to something smaller and this will go down. It's not that big of deal now, since our home is paid for and we are both working.

The only real tax downside for the ER is that of property taxes. However, that is something that you can control on some level with your choice of housing. For example, $50,000 to $60,000 buys a 3 bdrm 2 bath in a rural area or small town. For $100,000 to $150,000 you can get a nice home in a bigger city. Or just rent for $500 to $800 per month and forget about the property taxes.

There is no state income tax and other taxes and fees are pretty cheap.

Auto inspection: Around $13 per year per vehicle

Auto registration: Less than $130 per year for two vehicles (1997 and 2008).

Eladio

 

[Alan]

What are the differences in property insurance? Is insurance on a house in Florida significantly higher than one away from the hurricane zone in Texas?

We were living in Baton Rouge after Gustav a lot of folks I knew had BIG repair costs due to changes in insurance from some companies to being switched to a % as a deductible rather than a fixed $ amount. (FYI - we are renters)

 

[audreyh1]

What are the differences in property insurance? Is insurance on a house in Florida significantly higher than one away from the hurricane zone in Texas?

I suspect property insurance is a lot higher in Florida. It might be high on the TX coast, but most of TX is not close to the coast!

I also suspect housing prices in general are higher in Florida and that also affects property insurance rates. Florida had a big real estate run up. TX did not.

Audrey

 

[Orchidflower]

Texas is the winner for so long as I have been looking of the highest property tax rates: (scroll all the way down for rankings)

http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/030309dntexinsurance.3cf2ee2.html

2009 article, so should be up to date.

 

[Rustic23]

we insure a $350,000 home on Lake Livingston, East Texas. While the eye of Ike passed over the house here, no damage to our house or to the majority of the homes in the subdivision. Two homes had damage from trees falling on their home, but overall it was minor. Our insurance runs $1,200 per year, no flood insurance required.

 

[Orchidflower]

Rustic23, you're about 1-1/2 hr. on a non-rush hour time to Houston then? I'm just guessing here after looking at the map. What's your biggest city to buy groceries in? Livingston?
Nice video, Rustic23. If she said the asking price, I missed it. Is this in your section at Lake Livingston?

 

[Rustic23]

Hustsville and Livingston are about 25 min west or est. However, the town of Onalaska is about 10 min away, maybe 15 and it has a Brookshire Brothers supermarket. That is a grocery store found in many small Texas towns. There is a Walmart in both Huntsville and Livingston, and a Lowes in one and Home Depot in the other. Huntsville is the larger of the two and Sam Houston State University is there. Waterwood, our subdivision is in the middle.

 

[bbbamI]

Auto inspection: Around $13 per year per vehicle

I assume you mean state inspection? For the past few years we've paid $39.75 for the inspection of one vehicle.

 

[MichaelB]

At least in Texas you can get insurance. Regulation in Fl has disrupted the market and new policies are either Citizens (state risk pool backed by public funds) or new lesser know co's - none of the majors are writing new policies and many are reducing or closing up completely.

 

[audreyh1]

Texas is the winner for so long as I have been looking of the highest property tax rates.

Just to be clear - we were (temporarily) talking about property insurance rates, not property taxes.

Audrey

 

[audreyh1]

I assume you mean state inspection? For the past few years we've paid $39.75 for the inspection of one vehicle.

It's that much in TX counties that require vehicle emissions testing. Not all TX counties require it (the less urban areas), and state inspection is very cheap.

Audrey

 

[Martha]

I am in Arizona right now and they have closed almost all of their rest areas, are closing parks, and every month are laying off more and more people. I talked to two high school teachers who took $2000 pay cuts last year and another $2000 this year. They now make $28,000 a year. I talked to a Phd naturalist park ranger and he is cleaning toilets at his state park until they lay him off, maybe next week.

My sister in LA runs a drug treatment program. It only is surviving on stimulus money. Cut that out and there are going to be a lot more homeless addicts who have no source for help.

You get a state that is too poor or too cheap and you might pay for it in quality of life.

Just something to keep in mind. Especially as the recession continues.

 

[winger]

For fulltime RVers, Texas, Florida and and South Dakota are the popular choices. Most mail forwarding services are also located in these states. Just fyi, you use the address of the mail forwarding service as your domicile.

Our address is Wichita Falls, TX. Uh.......we have never been there.

 

[Moemg]

I have never lived in Texas but Florida is a haven for older singles . There is a real active social life that you can join pretty quickly and feel comfotable in even if you are alone . So if taxes are equal I'd pick Florida for that reason !