[quote=joec]Yeah, prop tax is much much higher in Texas and also, with so much land, I don’t think Texas is as good of an investment in terms of housing, also without prop 13 that we have here. I don’t think prop 13 would ever go away completely for primary home buyers even though they may try to change it, but with businesses and the wealthy controlling all the laws, it’s unlikely anything will ever change IMO).
My parents have places in TX and they said that they’d lose money if they were to sell the place they bought and are renting.
CA with Prop 13 is a very unique state (are we the only 1 in the country?) so if people move to Texas or Nevada, or wherever, I don’t think they would ever move back to CA due to the much much much higher housing cost.
Not to mention prop tax would be higher if they bought a new place compared to the one that was sold.
Overall, I think if your income is super high, then no state income tax can make a big difference. We know dual income doctors making mil+ in a tax free state and I can see why you’d want to do that, but if that wasn’t you, then I don’t think the numbers are that great assuming you buy something not super great in CA.
A high mortgage is also a greater tax deduction if you are high income in CA so that 3k mortgage compared to TX may actually end up being 2k/month where in TX, you may be claiming the standard deduction.[/quote]
This depends on why you are buying the house. If you are buying the house as an investment then California is probably a better choice since your expected future appreciation is higher. If you are looking to buy a house to live in I’d argue that Texas is a better choice because you get more house for your money. The higher property taxes are more then offset by the income tax & SDI you don’t pay unless you are low income but if that is the case you aren’t in the market to buy a house in California.
I think you are overstating the effect of the mortgage deduction but I also would argue that paying less in interest is a better choice then taking a larger deduction. The deduction only adjusts your AGI down so if your marginal total tax rate is 40% you are still paying 60 cents in interest to get a 40 deduction. I’d rather pay 6k in interest a year and only get a 1k deduction then to pay 20k in interest a year and get a 8k deduction.
There is another key factor that I believe is overlooked which is risk. The risk of having a large mortgage is that if you fall on hard times, lose your job, get very sick etc then it is much harder to sustain a 3k mortgage payment or find a replacement income that can support it. A 250k mortgage in Texas will run you about $1100 a month which would be easier to maintain in case of disaster.
Like I said in my original post to the person that started the thread, we like San Diego but simply don’t want to afford a 3-4k mortgage to live in a not great place/area when basically everywhere else in the country (excluding a few key metro areas) we could live on much less in a much nicer house and area.
We could easily be wrong and if we get there and don’t like it we can always move back or choose the next place to try out.
