Texas Real Estate Tax

[Rustic23]

Here is an interesting tidbit for those in Texas. Upon reaching 65 you can defer you real estate tax. You will be charged 8% simple NOT Compound interest on the tax. When you die, your estate will have 120 days to pay the tax.

I figure you are better off putting the money in an account at some safe compound rate. If you need cash later on you have it. Kind of like a reverse mortgage. I am not sure what the compound rate would need to be to offset the simple rate. I do know you would have a better chance of getting the cash than going to the city and asking for some of your tax dollars back.

 

[Craig]

Well, with due respect to TX, you can also decide to move to a state where they don't tear your head off for real estate taxes ... and, where there is also no state income tax. Like TN.

 

[Rustic23]

Texas has not state income tax. And getting daughter and grand kids to move or wife to stay behind does not sound like a choice either.

 

[Jarhead*]

Well, with due respect to TX, you can also decide to move to a state where they don't tear your head off for real estate taxes ... and, where there is also no state income tax.  Like TN. 

How does Tennessee pay for infra-structure costs? With reasonable real estate taxes, and no state income tax, what's the 500 llb. Gorilla?

Nevada has gambeling, and Alaska has oil.

Just curious.

 

[Rustic23]

From Bankrate.com
• The Tennessee income tax does not apply to salaries and wages, but most income from stocks, bonds and notes receivable is taxable.
• All taxable dividends and interest which exceed the $1,250 single exemption or the $2,500 joint exemption are taxable at the rate of 6 percent.
• All persons living in or companies doing business in Tennessee for more than 6 months must pay this tax by filing Form INC 250, Individual Income Tax Return by April 15. Tennessee filers who are members of the U.S. Armed Forces and members of Reserve or National Guard units called into active military service and who are serving in a designated combat zone and receiving combat compensation are granted an automatic extension to file their state taxes.

Now I don't know if this is true, but if income from Stocks, Bonds and notes receivable is taxable then this really does not seem like a good place for a retiree to live off stocks, bonds and notes.

 

[Rustic23]

OK! Read the rest on Tennesee Taxes. I didn't even know most of the things they tax existed!

http://www.bankrate.com/yho/itax/edit/state/profiles/state_tax_Tenn.asp

 

[Rustic23]

From the State site these are a list of State Taxes. Now some of these are 'Business Taxes' and of course if you live there you don't have to pay those..... RIGHT

Alcoholic Beverage Taxes
Automobile Rental
Surcharge Tax
Bail Bond Tax
Beer Taxes
Coin-operated Amusement Tax
Franchise and Excise Taxes
Gift Tax
Gross Receipts Taxes
Individual Income Tax
Inheritance Tax
Liquor-by-the-drink Tax
Mixing Bar Tax
Motor Fuel Taxes
Oil and Tire Taxes
Professional Privilege Tax
Sales and Use Tax
Severance Taxes
Television and
Telecommunications Tax
Tobacco Taxes
Unauthorized Substances Tax

 

[Craig]

Gee, Rustic23, I didn't realize the TX Chamber of Commerce was posting here ...

OK, look at the list of TX taxes ... http://www.window.state.tx.us/m23taxes.html.  I'm sure that is not a complete list.  You don't think TX has a long list?

Jarhead, TN has a higher sales tax than some states ... 9.25% in this county.  Personally, I prefer sales taxes ... I can cut my taxes by buying less.  Also, the state spends relatively little.

I can tell you from living here, that there are a ton of exemptions to the TN "income tax".  Lived here for almost 2 years, and have yet to meet someone who files that tax return.

Rustic23, by all means, stay in TX.  Someone needs to pay those taxes.  And, while you're doing so, take some time to check out the real estate appreciation rates in the Lone Star State.  Now that is taxing.  Ouch.  Funny how folks don't want to 'buy' real estate in a state where you effectively rent from the state.

I lived in TX.  Nice in many ways.  But it was pretty hard to ignore how we were having our heads torn off with those real estate taxes.  It was costing us $600 per month, on a $300K home. No kidding. The only, only place where I've lost money on a home.  And, I've hired some of my former employees in TX, and helped them move to TN ... they are surprised that people can actually make money on their homes ... it is a new concept for them, and I am dead serious.

 

[Rustic23]

I will be glad to stay in Texas, as most Texans are. I was born here and have never lost money on the sale of a house, In fact the lot the retirement home is built on went from $35,000 to $145,000 in 5 years. If you purchased during the 70's and sold in the 80's you lost big. Lots of reasons for that most that can be traced to U.S. Government policies. It has taken 15 to 20 years to the market to stabalize but it has.

As for playing 'your state taxes more than mine'. It is a stupid past time. All governments get their due. TN, TX, CA, Al, Ak and the rest of the 50 get their due. I will bet if we calculate total taxes paid we would be very close no matter what state you are in. The difference is more in who gets taxed. I'll bet in Floriday (no income tax) the elderly do not get hit as hard as a visitor. But make no mistake, Fl, get it money.

If you like where you live, great, stay there. Extole the beauty, the mountains, the lakes, wine, women, song. Touting 'My state taxes less than yours' just doesn't cut it. If people move to Tennessee, I'll bet it was for family, or jobs. Lets face it that is why most people move.

 

[Craig]

You posted an idea to strategize around TX real estate taxes ... it is a fair question to ask why pay those taxes at all.

I disagree states are roughly equal on tax burdens. And, to be fair, I was having fun with you regarding TX taxes ... but I do tire a bit of the "ain't TX great", after living there. You and I both know that the high real estate taxes are quite an issue of debate in TX politics ... the Chambers of Commerce have determined this is indeed an issue.

But see http://money.cnn.com/pf/features/lists/taxesbystate2005/ for a comparison of state tax burdens. In all, TX fairs well, though a little bit worse than TN.

Also see http://www.ofheo.gov/HPIMSA.asp, and compare Dallas and Nashville, for example, or other MSA's. Interesting site. I extol Nashville a bit, mostly because I am surprised at the activity here. A pleasant surprise.

As you say, there are certainly other factors. Enjoy TX.

 

[Arif]

I love taxes Texas . There real estate taxes are outrageous (at least in Bell county). I'm currently selling our rentals there and buying in GA where the property taxes in half that. GA has an income tax but atleast I can shelter my income there easier than sheltering real estate taxes owed in TX. I do love the lake Travis area though

 

[Rustic23]

I find ones home state is like ones family. My brother is a real SOB, but he is MY SOB and you can't call him that.

Guess I am a little, OK a lot that way about Texas. Sorry. You are right, property taxes in Texas are ridiculous. Your are also right, the purpose of the post was to let folks that have chosen this place as home there is an out. Actually there is another that deals with freezing your school tax at 0 and transferring that 0 amount to another home no matter what the value of the home. These are two of the quirks in the Texas law many home owners are unaware of. For me it acts as a hip pocket boost to my retirement. I know I can either pay the tax or defer it.

I have also had the question ask, ‘Won’t your kids have to pay it?’ Yes and No. Your estate owes the tax. If there is no money in your estate, i.e. the house is worth less than the tax, your kids get nothing, but they do not incur the debt. Besides, I figure I gave my kids a real nice third grade education, so they should be able to get along just fine.

 

[Martha]

I feel free to admit that Minnesota's tax burden is greater than either Texas or Tennessee and with my own form of "nationalism" I would rather live in Minnesota.

 

[Craig]

Thus the beauty of a free country, where we can live in that state that offers us our chosen group of benefits. It is a great land.

Take care.

 

[Nords]

I feel free to admit that Minnesota's tax burden is greater than either Texas or Tennessee and with my own form of "nationalism" I would rather live in Minnesota. 

Well, we found out today that Hawaii is #1!

"Hawaii residents paid more state taxes in 2004 than residents of any other state in the country, according to newly released data from the Census Bureau. Hawaii residents paid an average of $3,050 per person in 2004, while Texans paid the least, an average of $1,368."

Of course this is only the state tax number, which doesn't include property taxes & sales taxes. Hawaii is actually one of the nation's most tax-friendly states if you don't have any earned income.

Spouse & I are dragging the state-tax averages way down, and our solar tax credits will do so up to 2009...

 

[Mr._johngalt]

Well, we found out today that Hawaii is #1!

"Hawaii residents paid more state taxes in 2004 than residents of any other state in the country, according to newly released data from the Census Bureau.  Hawaii residents paid an average of $3,050 per person in 2004, while Texans paid the least, an average of $1,368."

Of course this is only the state tax number, which doesn't include property taxes & sales taxes.  Hawaii is actually one of the nation's most tax-friendly states if you don't have any earned income.

Spouse & I are dragging the state-tax averages way down, and our solar tax credits will do so up to 2009...

I have owned 2 pieces of property in Texas and I didn't notice much difference from
Illinois (or Wisconsin or Michigan). I may take another look at shifting our legal residence
from Illinois to Texas. This has appeal from several angles.

JG

 

[TromboneAl]

That's just 'cause you're all so rich there, sipping your Mai Tai's and all.

 

[JPatrick]

I may take another look at shifting our legal residence
from Illinois to Texas.  This has appeal from several angles.

JG

Of course you are aware that the Texas residency test is a whole bunch tougher than the "snobird test".
Si?

 

[cute fuzzy bunny]

Huh...I thought we had some posted study of retirees "most retiree tax friendly states" and hawaii was one of the better ones while texas...not so much. Maybe my recollection stinks.

Probably has to do with the avoidability of income taxes in retirement. Them there property taxes are a little tougher...

 

[astromeria]

Our South Carolina legislature is trying to eliminate primary residence property taxes altogether in favor of a 2% increase in sales taxes. Meanwhile our governor ran on a platform of reducing state income taxes by 2%--now that makes more sense to me since SC income taxes are relatively high (top bracket--reached at barely over minimum wage!--is 7%). But our prop taxes are already low--it ain't broke, folks. Seems like we're biting off our nose to spite our face. Personally, it's close to a wash for us financially between prop taxes and the state tax increase, but I think it's bad for the working class in general and for business--the state Chamber of Commerce has come out against it. So far, the only legislators against this seem to be located in Charleston--the indigo city in the red state 

 

[Nords]

Huh...I thought we had some posted study of retirees "most retiree tax friendly states" and hawaii was one of the better ones while texas...not so much. Maybe my recollection stinks.

Probably has to do with the avoidability of income taxes in retirement. Them there property taxes are a little tougher...

No, you're right, that was last year's Bloomberg "Wealth Management" article. Bloomberg sold the magazine and the website doesn't seem to archive that anymore.

Hawaii's tax system socks it to the workers and gives the retirees a break. Excise tax is pretty low, too, although it's rising from 4% to 4.5% next year. Property taxes are becoming an issue and the Hawaii legislature (in session for a couple weeks already) is considering a number of Prop-13 type proposals. Since we have almost no earned income and a low-consumption lifestyle, that works for us!

 

[Rustic23]

I came across this article. Also looks like the site may have some other good information. I have not explored it completely.

http://www.retirementliving.com/RLtaxes.html

 

[cute fuzzy bunny]

No, you're right

Woo! Once more today and i'll be tied with the broken clock in the garage...

 

[FC4free]

I am surprised that little/nothing has been said about Nevada. 6000 people moving to Vegas per month can't be wrong. No state income tax, reasonable property taxes (about 1% of value). YOU control if you pay any gaming taxes (don't gamble, don't pay). Reasonable food costs at the casino (again, if you've got the will power not to donate to the one armed bandits). Sales tax is 7.5% but no tax on food.

 

[cute fuzzy bunny]

Temperature of hot molten lava all summer long...

Pollution.