Property Taxes... (Dallas, Rowlett, Mercedes: sales, lease, insurance)

[silvad242]

So, someone was trying to scare me from considering a relocation to Dallas with the property taxes. I live in SLC and don't like the high cost of living, so Dallas seems like a pretty good fit (houses are about 100 grand cheaper). But, the person trying to convince from going suggested that with the property taxes, the mortgage payment comes out about the same. Although I don't doubt this, I argued that it would equal out because there's no state income tax. Would I be correct in assuming this?

[momof2dfw]

It is all going to depend on what area you buy in if you have a higher property tax rate AND what price home you buy. You CAN make a choice in the price of the home you buy and keep your property taxes down. Even if you can afford to buy a $500K house you do not HAVE TO. So you buy a house that is lower and keep your propety taxes down and in the meantime you can increase your income and not be taxed to death on it with a state income tax.

[LQQKOUT]

It does even out in the end if you purchase WITHIN your means. Like Mom said even if you can get that $500K home but the $200K home fits your budget, go with the leaser one. The thing I learned was the large home also comes with a large ac and heating bill...so we downsized in sq ft & to a single story. The trick is purchase within your means. Yes, Texas has the highest property taxes in the nation.

[silvad242]

We are Dave Ramsey people. We won't have a mortgage payment that is more than 25% of our monthly take-home pay.

[pinkgreenmover]

One research method that may help you out is to peruse properties in the county in which you are thinking about purchasing a home. Assuming you're somewhat familiar with the Dallas area, for example, you might consider using dallascad.org or collincad.org to ballpark values. Once you're on the site, you can search appraisals by street name in the area of town you like. Say you have the budget/want to be in the M streets in Dallas, look up McCommas, Mercedes or Morningside. Click on a property that reflects your price point and square footage and you'll see the tax payment. I just did this and found a 1,300 sf house valued at 263K and the estimated taxes are $5,642. Of course, there are lots of variables, i.e. whether or not there's a homestead or over 65 exemption, building class, location and age of residence, etc. I'm sure there's an easier way, like calling the district and asking for the tax rate and then multiplying that by the tax value. Either way, you're starting off right by doing your due diligence BEFORE making the move. Best wishes!

[ETex2]

I have spent some time in the past researching property taxes and comparing Texas to other states as to property taxes as a percentage of per capita income, as a percentage of market value of the home, etc.. Various sites and their tables can be confusing unless you study exactly how they got to those numbers.

One recent table showed us at no. 9, and one recent table at no. 1 with respect percentage of median home value. With respect to income, taxes paid to local taxing entities and the state, we are generally in the bottom ten (paying less than most).

So we pay less to the state, but more to local authorities since cities get virtually no money from the state that goes to infrastructure such as roads, utilities, etc.. Public schools also get most of their money from local property taxes. It's pretty confusing and it's easy to say that Texas has the highest property taxes in the nation, but overall it's very affordable here if you factor in the actual cost of housing.

[WillysB]

You are going to pay a property tax based on the county valuation of the property, typically about 2 to 3 percent, depending on the county. The payment will be built into your mortgage payments. If you have an address of a property, you can look up the assessed value and taxes on that property as public information.

You are going to pay a sales tax on all purchases excepting non-prepared foods (grocery store) and drugs. Prepared foods such as the deli or restaurant will be taxed. That tax may be as high as 8.5%, depending on city and county. There is one weekend each year that is tax exempt for many purchases for back to school. Something GWBush got right as governor.

[dmorris]

silvad242
Definitely you have been given good advice about making sure you stay within your means and it sounds like you already do that. You can easily figure out what your taxes will be on a Texas property once you choose an area and price range. Figure out what you are paying in state income tax plus your property taxes in Utah and then compare that to the figure in Texas. Once you get how much house you can afford, really look at the neighborhoods, the quality of the schools in those areas and compare it to your quality of life where you are. Make sure that when you compare costs of living between SLC and Dallas, you are comparing "like neighborhoods." Dallas feels very similar to SLC, if you are willing to drive 30-40 minutes, you will have many suburbs to choose from with housing options less than 300,000. As you move inwards close to town, obviously you are paying a higher premium for the land and house. Yes, you can find some great prices here, but are they places you want to live? - that is what you need to decide. The electricity is also a major difference. A 3,000 square foot home can easily run over 400.00 - 450.00 dollars a month if the family is at home a lot. This is only for several months out of the year (summer) but generally speaking, the costs for electricity are quite a bit higher.
The salaries are higher here in many fields and that is an important consideration in doing your comparison as well - housing costs are only one dimension. I think you have to look at the big picture and potential earning power down the road. Dallas is much more populated and has a lot going on economically. You definitely should come down and visit, check out areas, get a feel for it. Come quick before the heat gets going.

[momof2dfw]

Originally Posted by WillysB

You are going to pay a property tax based on the county valuation of the property, typically about 2 to 3 percent, depending on the county. The payment will be built into your mortgage payments. .

It also depends on the city in which you live. Every city has a different rate as does every school district. The city of Rowlett has one of the highest property taxes for Dallas County.

You do not have to do an escrow account with your mortgage company to pay your property taxes and insurance. Some people do and some should. It also depends on how much you finance if it is required by the lender. We do not have an escrow account as we choose to pay our own property taxes and insurance instead of letting the lender hold our money and do it. If you are diligent at saving your money to pay your taxes then you don't need to have an escrow account. Then YOU can save your money all year long in a savings account and make the money off of it instead of the mortgage company.

[lh_newbie]

I don't know what the property tax rate is in SLC, but I did look up the Utah state income tax rate which (according to what I saw) is 5%. So in order for you to compare income+property tax burden, you'd need to run the calculation:

SLC Tax + Mort = ( income X 5%)/12 + (property tax)/12 + mortgage pmt
DFW Property Tax + Mort = (property value X 2.25%)/12 + mortgage pmt

That should give you a rough estimate of which area is better for you. Obviously this will vary based on income and how much home you buy. If someone makes $30K/yr and has a 100K home in DFW - they're going to be paying about $2250/yr in property taxes -vs- SLC income tax of $1500/yr + whatever the property taxes are. In this case, it may be relatively close. On the other hand, high income earners that keep their home at a reasonable cost is a different story. If you earned $150K and had a $300K home - you'd be talking an income tax savings of $7500 in DFW and your total property tax bill would be about $6750... so you'd be saving MORE in income taxes than your entire property tax bill - add that to what the OP mentioned about housing costs being lower in DFW, so you could essentially view the move as saving $100K in mortgage and getting property taxes for free.

anyhow - hope the data helps.