Figuring out sale price for sold homes (Austin, Plano: how much, house)

[Need4Camaro]

A good while back I did a property tax comparison of W.Plano TX vs an Income/Property Tax comparison of Roswell GA (the closest comparison to W.Plano in Atlanta GA) @ a salary of $100k and a $400k property and it turned out Plano (which has a higher tax rate than Austin) actually came out to be slightly more affordable. I was expecting the inverse.

Now if you really want to take your taxation into overdrive, we could always adopt Illinois model… …which has a higher property tax AND a state income tax too!

[CarnivalGal]

Originally Posted by Trainwreck20

Based on history locally, a huge drop in house value over any period of time is extremely unlikely, whereas large increases in value (over the 10% cap) are more likely. In those cases, you pay less than the purported tax rate. I don't think that is ever going to happen to an income tax and your income - if your income doubles, so will your tax (or more than double, depending on brackets). If your house doubles in value in one year, it will only go up 10%.

And in the big picture, no place has NO property tax, while all but 9 states have income tax - which (in most cases) will tax capital gains and 401k income. Many states with property tax do not provide age deductions at all or nearly as significant as Texas.

I am not saying it is a 'deal', but it isn't nearly as bad as many people make out. Below is a spreadsheet result that is somewhat dated - I updated the tax rates to 2021, but did not review for other updates - that shows what taxes might be on a hypothetical house that is currently $600k and the owner will turn 65 in 10 years.

The numbers assume 4% appreciation on the house (close to long-term historical) and that tax rates are constants. In reality, the base tax rate is down ~0.5% per year, even with the big jump in CoA taxes in 2020. Regardless, based on these assumption, once you turn 65 the taxes would go up about 1.8% per year, mainly limited by the 'capping' of the school taxes the year you retire.

It will probably not go down substantially over a long period of time, but that doesn't mean it's not possible. And they are assuming that I am going to sell my house at it's peak value. My value and assessment HAS gone down before. What if I sold my house during that downturn? Do I get a refund on the taxes I paid for the higher value the year before, even though I essentially paid taxes on an increase I never realizes the benefit of? No, I don't.

And, yes, it's capped at 10%. Per year. That means that even if the valuation only goes up 2% next year, my taxes will go up 10%, and keep going up 10% until it "catches up."

Income tax is different because it's not subjective. I earn X number of dollars, and I pay taxes on that amount. What the appraisal district does is guess what the value is. It would be able to do this a lot more accurately if they actually had access to values. Same with appraisers who people hire for refis, insurance, etc. They don't have that information because a very large group, with a vested financial interest, is essentially holding that information hostage.

[Austin97]

Originally Posted by CarnivalGal

It will probably not go down substantially over a long period of time, but that doesn't mean it's not possible. And they are assuming that I am going to sell my house at it's peak value. My value and assessment HAS gone down before. What if I sold my house during that downturn? Do I get a refund on the taxes I paid for the higher value the year before, even though I essentially paid taxes on an increase I never realizes the benefit of? No, I don't.

And, yes, it's capped at 10%. Per year. That means that even if the valuation only goes up 2% next year, my taxes will go up 10%, and keep going up 10% until it "catches up."

Income tax is different because it's not subjective. I earn X number of dollars, and I pay taxes on that amount. What the appraisal district does is guess what the value is. It would be able to do this a lot more accurately if they actually had access to values. Same with appraisers who people hire for refis, insurance, etc. They don't have that information because a very large group, with a vested financial interest, is essentially holding that information hostage.

Your effective value can go up 10% but that doesnt mean your taxes will go up 10%.

If everyone's effective value went up 10% then your proportion of the taxes would stay the same. So your taxes will generally only go up by how much the taxing entities budgets increase.

[TX Rover]

Originally Posted by Austin97

Your effective value can go up 10% but that doesnt mean your taxes will go up 10%.

If everyone's effective value went up 10% then your proportion of the taxes would stay the same. So your taxes will generally only go up by how much the taxing entities budgets increase.

Therein lies a big part of the issue. As values rocket it seems like the budgets keep climbing as well. In theory, your tax rate should drop when there’s a significant overall lift in tax base, but we’ve got too many politicians out there spending like a crackwhore on a bender.

[Austin97]

Originally Posted by TX Rover

Therein lies a big part of the issue. As values rocket it seems like the budgets keep climbing as well. In theory, your tax rate should drop when there’s a significant overall lift in tax base, but we’ve got too many politicians out there spending like a crackwhore on a bender.

yeah but the vast majority of people dont understand. They think their taxes are going up because their values are going up and that isnt (necessarily) the case.

They also never met a bond package they didnt like.

the state legislature gave a little relief by changing the way recapture is calculated and by capping city tax increases to 3.5%

[TX Rover]

Originally Posted by Austin97

yeah but the vast majority of people dont understand. They think their taxes are going up because their values are going up and that isnt (necessarily) the case.

They also never met a bond package they didnt like.

the state legislature gave a little relief by changing the way recapture is calculated and by capping city tax increases to 3.5%

Yeah… one major downside to owning a rental in a city you don’t live in is that you don’t get a say in that.

[Trainwreck20]

Tax rates have been decreasing over time - pretty noticeable from 2013 to 2019, then the big 'jump' in the CoA taxes due to the mobility bond package....

[Jtxg]

I don't know if anyone has mentioned it, but if you join a website called estately, create a free user name and password, you can see sold price per foot. I live in the Houston area and it's spot on (when compared to what my house sold for). I don't think you can search by subdivision, but I know you can by zip code.

[anjalisarinna]

My tax rate this year is the lowest it's been in the years we've owned the house. However, the value has gone up significantly. This year, our tax bill is several hundreds more than last year's. So the lowering of the tax rate really doesn't mean anything to the average homeowner if the appraised value increases seemingly exponentially as well. It is easy for people to correlate appraised value with taxes increasing.

[10scoachrick]

Originally Posted by Need4Camaro

A good while back I did a property tax comparison of W.Plano TX vs an Income/Property Tax comparison of Roswell GA (the closest comparison to W.Plano in Atlanta GA) @ a salary of $100k and a $400k property and it turned out Plano (which has a higher tax rate than Austin) actually came out to be slightly more affordable. I was expecting the inverse.

Now if you really want to take your taxation into overdrive, we could always adopt Illinois model… …which has a higher property tax AND a state income tax too!

I know it has changed in the last few years; but we Sandy Springs(Fulton County) folks had to pay a hefty 1% ad valorum tax on our vehicles...almost $1000 for us one year . Served us right for being able to afford two nice vehicles at once