Is it worth to relocate for retirement?

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chipperd
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Re: Is it worth to relocate for retirement?

Post by chipperd »

illumination wrote: Sat Aug 22, 2020 11:38 am You need to figure out what your retirement will look like in terms of income, but I don't really buy into the "it all evens out" arguments regarding certain states and how they tax people. There's an ENORMOUS difference between what you will pay in taxes to live in somewhere like CA or MA versus Texas or Florida, especially if you are in a higher bracket. I understand it's not lower on every single thing, but looking holistically, it's simply lower or higher because that's what the voters in those states usually want. And usually higher tax states go hand-in-hand with higher cost of living. If you're not working, you're not getting the benefit of a higher salary in those areas.

Where I think it's splitting hairs are those "middle of the road" states and you make a lateral move to something similar. Or if you see yourself in a lower bracket for most of your retirement. But on the extremes, it makes a huge difference.
Where the OP lives, Mass, is a middle of the road tax state
markcoop
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Re: Is it worth to relocate for retirement?

Post by markcoop »

What I have wondered about is living in multiple locations. We live in the NY and probably still want to be in this area some of the time in retirement. I am considering moving to Florida and living there half the year plus 1 day and spending the rest of our time in other places - probably 3-4 months in NY and 2-3 months in CO. That way you get the best of all worlds - low state taxes, good weather when you want it, still connected to past bases. Not sure how to make that work with housing yet.
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vested1
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Re: Is it worth to relocate for retirement?

Post by vested1 »

We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k. That's because SC levies yearly property taxes on vehicles, boats, and the motors on those boats. We have a 2012 Tacoma and a 2019 Hyundai, taxes $831. We have modestly priced boats and motors. A 2020 20' pontoon with a 90 hp outboard cost $29,000, tax $1,503 (being appealed), a 2019 16' bass boat with a 50 hp outboard, cost $20,000, tax $451. The majority of these property taxes go for schools, which isn't exempted at any age, except for your primary residence over age 65.

The house is levied a property tax of $2,064, but would be $3,035 higher if school tax wasn't exempted because we are over age 65. We will get a Homestead exemption in 2021 of $50,000 taken off of the appraised value of the house for the base price determination.

Our utility costs are less than they were in CA, where it never snowed and we where we didn't even have air conditioning and rarely needed the heat. This, despite our new house being 3 times as big and all electric. The insulation in our new house is impressive, whereas in CA we had none other than the attic, which we added and which is typical for a 60 year old house there. House and yard maintenance was the biggest surprise, and even though the SC house is 3 times newer than our previous one in CA, the cost to maintain everything has easily tripled, mostly due to the weather.

Gas is about 1/2 of what it was in CA, largely because of gas taxes and a special expensive formula in CA, and sales tax is capped at $500, so big ticket items are much cheaper here. Gas taxes in CA help maintain the roads, and I believe they also do in SC, but the roads here, even the freeways have no shoulders or pullouts, so breaking down can be an interesting experience.

State taxes are less here because of a 30k exemption for retirement income for those over 65, but we were only paying about 2k in State taxes in retirement in CA anyway.

Other than taxes, other aspects needed to be adjusted to, like much less emphasis on recycling, and the lack of healthy food in restaurants. All forms of insurance are significantly higher here, as are real estate transactions because SC mandates that the seller hire a real estate attorney to manage escrow.

All that being said, we enjoy it here, and will enjoy it even more when scheduled visits by friends and family stop being cancelled due to the virus. Our house in SC situated on a lake like ours in CA would cost about 6 times what we paid. The upgrade to a larger, newer, and greatly upgraded home for the price we paid was astounding.

Then there are the intangibles. People are generally friendlier here, at least if you're not from the north. I was expecting new contacts to be apolitical in their dialogue, but that has not been our experience, with every visit by a service person meaning being subjected to political statements. Neighbors and new acquaintances always ask who you are voting for, which was never the case in CA.

My best advice would be to visit the area where you are thinking of relocating to, perhaps renting for a year before shopping for a house. We all have our preconceptions of what another State is like, which are usually disproven when we are able to discard our biases. I would also say that taxes should be a minor consideration, since other than the extremes, it pretty much evens out everywhere. For us, living on a lake and being able to walk out our backdoor, jump in our boat, and go fishing or simply just cruise wasn't possible anywhere else for the price we paid in cash to be here.
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Re: Is it worth to relocate for retirement?

Post by LadyGeek »

As a reminder, this is a "No politics" forum. I removed an off-topic post and reply regarding CA's Proposition 13 and the upcoming election (proposed legislation). See: Politics and Religion
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JackoC
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Re: Is it worth to relocate for retirement?

Post by JackoC »

Tingting1013 wrote: Tue Sep 15, 2020 9:16 pm
iamblessed wrote: Tue Sep 15, 2020 9:15 pm
Tingting1013 wrote: Tue Sep 15, 2020 8:41 pm
iamblessed wrote: Tue Sep 15, 2020 8:32 pm
Tingting1013 wrote: Tue Sep 15, 2020 7:02 pm A $1M house in the Midwest at 2% property tax costs the same as a $2M house in the Bay Area at 1% property tax.

Also, the $2M house is $1.5M land and $0.5M house, while the Midwest $1M house might be 80% house or more. Maintenance and insurance costs are therefore higher in the Midwest.
Even if everything you say is true you still have 1M to help you with higher maintenance, insurance costs and taxes.
You’re confusing cash flow with net worth.
In CA I would have $2M in home equity.
In WI (for example) I would have $1M in home equity and $1M in my portfolio.
These two scenarios are, so far, financially equivalent. Now we need to calculate annual expenses. And I’m saying that the house in WI will have similar or higher ongoing expenses than the one in CA.
True but you can withdraw 4% a year from your 1M portfolio.
You can get a mortgage or HELOC too.
The big thing you are leaving out is that living in a $2mil house, you consume the owner imputed rent on a $2mil property. Living in a $1mil house your consumption of imputed rent is roughly only half as much (give or a take a different ratio of imputed rent to value in a different location).

The simplest case to illustrate would be if you either lived in a $2mil house or lived in a $1mil house and bought another $1mil property to rent out to other people. Both portfolio's have the same starting value, and the simplest assumption of home price appreciation would also be same for both. But living in the cheaper place you get to spend the net rental income on the second $1mil property on non housing items. Living in the $2mil place that part of the return is automatically consumed just by living there. Substitute a stock/bond portfolio for the second $1mil property and it doesn't fundamentally change the answer.

It's one of those things one might think through more carefully if one's actual situation: it is ours. Our small house in inner NY area of NJ has come to have an extremely high market value for its size by national standards (was far less when we bought it long ago, but that's irrelevant now). The extra 'cost' of living here isn't just $21k+ property tax v a far lower number, or NJ income tax vs zero in various states, or just utilities, home contractors and some other stuff which tends to be more expensive here. The biggest item is the return we could get on 3/4 of our house's value by buying a nice similar size house in a low or even medium cost area and only consuming the imputed rent on a 1/4 as much. Your example of $1mil WI v $2mil Bay Area (or our neighborhood) is really apples and oranges, the WI place is going to be much bigger. But even if we got a larger house 1/2 as expensive as ours in a low prop tax area in no state income tax state, the reduction in consumption of owner imputed rent would still be the biggest single item in our cost reduction. Any difference in running cost of the house would be minor in comparison.

OTOH NY is my home town (though not wife's), some grown kids live in walking distance and others a fairly short drive, so a distant move to a no tax state has some real family life drawbacks.
jmw
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Re: Is it worth to relocate for retirement?

Post by jmw »

vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.
Thanks for your perspective. Would like to see viewpoints from other migrants from California especially higher income retirees with a government pension.

I have a prop 13 home as well, so that gives me a long-time customer discount if I chose to stay.
ncbill
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Re: Is it worth to relocate for retirement?

Post by ncbill »

vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k. That's because SC levies yearly property taxes on vehicles, boats, and the motors on those boats. We have a 2012 Tacoma and a 2019 Hyundai, taxes $831. We have modestly priced boats and motors. A 2020 20' pontoon with a 90 hp outboard cost $29,000, tax $1,503 (being appealed), a 2019 16' bass boat with a 50 hp outboard, cost $20,000, tax $451. The majority of these property taxes go for schools, which isn't exempted at any age, except for your primary residence over age 65.

The house is levied a property tax of $2,064, but would be $3,035 higher if school tax wasn't exempted because we are over age 65. We will get a Homestead exemption in 2021 of $50,000 taken off of the appraised value of the house for the base price determination.

Our utility costs are less than they were in CA, where it never snowed and we where we didn't even have air conditioning and rarely needed the heat. This, despite our new house being 3 times as big and all electric. The insulation in our new house is impressive, whereas in CA we had none other than the attic, which we added and which is typical for a 60 year old house there. House and yard maintenance was the biggest surprise, and even though the SC house is 3 times newer than our previous one in CA, the cost to maintain everything has easily tripled, mostly due to the weather.

Gas is about 1/2 of what it was in CA, largely because of gas taxes and a special expensive formula in CA, and sales tax is capped at $500, so big ticket items are much cheaper here. Gas taxes in CA help maintain the roads, and I believe they also do in SC, but the roads here, even the freeways have no shoulders or pullouts, so breaking down can be an interesting experience.

State taxes are less here because of a 30k exemption for retirement income for those over 65, but we were only paying about 2k in State taxes in retirement in CA anyway.

Other than taxes, other aspects needed to be adjusted to, like much less emphasis on recycling, and the lack of healthy food in restaurants. All forms of insurance are significantly higher here, as are real estate transactions because SC mandates that the seller hire a real estate attorney to manage escrow.

All that being said, we enjoy it here, and will enjoy it even more when scheduled visits by friends and family stop being cancelled due to the virus. Our house in SC situated on a lake like ours in CA would cost about 6 times what we paid. The upgrade to a larger, newer, and greatly upgraded home for the price we paid was astounding.

Then there are the intangibles. People are generally friendlier here, at least if you're not from the north. I was expecting new contacts to be apolitical in their dialogue, but that has not been our experience, with every visit by a service person meaning being subjected to political statements. Neighbors and new acquaintances always ask who you are voting for, which was never the case in CA.

My best advice would be to visit the area where you are thinking of relocating to, perhaps renting for a year before shopping for a house. We all have our preconceptions of what another State is like, which are usually disproven when we are able to discard our biases. I would also say that taxes should be a minor consideration, since other than the extremes, it pretty much evens out everywhere. For us, living on a lake and being able to walk out our backdoor, jump in our boat, and go fishing or simply just cruise wasn't possible anywhere else for the price we paid in cash to be here.

It's not a fantasy...you substantially upgraded your residence.

You would indeed be paying less had you picked a comparable property without the toys.

Aren't you the same poster who complained about the expense of tree removal...after you decided to retire to a wooded property?

Most retirees would instead be downsizing...e.g. moving from a SFR to a 2-bedroom cottage/townhouse/condo often in a planned community like The Villages...no more yard work plus maintenance covered by a fixed monthly fee.
palanzo
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Re: Is it worth to relocate for retirement?

Post by palanzo »

vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k. That's because SC levies yearly property taxes on vehicles, boats, and the motors on those boats. We have a 2012 Tacoma and a 2019 Hyundai, taxes $831. We have modestly priced boats and motors. A 2020 20' pontoon with a 90 hp outboard cost $29,000, tax $1,503 (being appealed), a 2019 16' bass boat with a 50 hp outboard, cost $20,000, tax $451. The majority of these property taxes go for schools, which isn't exempted at any age, except for your primary residence over age 65.

The house is levied a property tax of $2,064, but would be $3,035 higher if school tax wasn't exempted because we are over age 65. We will get a Homestead exemption in 2021 of $50,000 taken off of the appraised value of the house for the base price determination.

Our utility costs are less than they were in CA, where it never snowed and we where we didn't even have air conditioning and rarely needed the heat. This, despite our new house being 3 times as big and all electric. The insulation in our new house is impressive, whereas in CA we had none other than the attic, which we added and which is typical for a 60 year old house there. House and yard maintenance was the biggest surprise, and even though the SC house is 3 times newer than our previous one in CA, the cost to maintain everything has easily tripled, mostly due to the weather.

Gas is about 1/2 of what it was in CA, largely because of gas taxes and a special expensive formula in CA, and sales tax is capped at $500, so big ticket items are much cheaper here. Gas taxes in CA help maintain the roads, and I believe they also do in SC, but the roads here, even the freeways have no shoulders or pullouts, so breaking down can be an interesting experience.

State taxes are less here because of a 30k exemption for retirement income for those over 65, but we were only paying about 2k in State taxes in retirement in CA anyway.

Other than taxes, other aspects needed to be adjusted to, like much less emphasis on recycling, and the lack of healthy food in restaurants. All forms of insurance are significantly higher here, as are real estate transactions because SC mandates that the seller hire a real estate attorney to manage escrow.

All that being said, we enjoy it here, and will enjoy it even more when scheduled visits by friends and family stop being cancelled due to the virus. Our house in SC situated on a lake like ours in CA would cost about 6 times what we paid. The upgrade to a larger, newer, and greatly upgraded home for the price we paid was astounding.

Then there are the intangibles. People are generally friendlier here, at least if you're not from the north. I was expecting new contacts to be apolitical in their dialogue, but that has not been our experience, with every visit by a service person meaning being subjected to political statements. Neighbors and new acquaintances always ask who you are voting for, which was never the case in CA.

My best advice would be to visit the area where you are thinking of relocating to, perhaps renting for a year before shopping for a house. We all have our preconceptions of what another State is like, which are usually disproven when we are able to discard our biases. I would also say that taxes should be a minor consideration, since other than the extremes, it pretty much evens out everywhere. For us, living on a lake and being able to walk out our backdoor, jump in our boat, and go fishing or simply just cruise wasn't possible anywhere else for the price we paid in cash to be here.
Where in CA did you live to have a 3K property tax?
illumination
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Re: Is it worth to relocate for retirement?

Post by illumination »

chipperd wrote: Wed Sep 16, 2020 5:59 am
illumination wrote: Sat Aug 22, 2020 11:38 am You need to figure out what your retirement will look like in terms of income, but I don't really buy into the "it all evens out" arguments regarding certain states and how they tax people. There's an ENORMOUS difference between what you will pay in taxes to live in somewhere like CA or MA versus Texas or Florida, especially if you are in a higher bracket. I understand it's not lower on every single thing, but looking holistically, it's simply lower or higher because that's what the voters in those states usually want. And usually higher tax states go hand-in-hand with higher cost of living. If you're not working, you're not getting the benefit of a higher salary in those areas.

Where I think it's splitting hairs are those "middle of the road" states and you make a lateral move to something similar. Or if you see yourself in a lower bracket for most of your retirement. But on the extremes, it makes a huge difference.
Where the OP lives, Mass, is a middle of the road tax state

I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million. So if your estate is $1,000,001, the entire estate is then subject to the first estate tax bracket.

https://smartasset.com/estate-planning/ ... at%2016%25
JackoC
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Re: Is it worth to relocate for retirement?

Post by JackoC »

palanzo wrote: Wed Sep 16, 2020 1:35 pm
vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k.
Where in CA did you live to have a 3K property tax?
Seems like maybe 1/2 of housing related posts on this forum have something to do with CA, so even people who'd never move there (I lived in LA for a short time when young, liked it to live for a short time but never on a list of places I'd live permanently) get to know the various quirks of CA reading threads here. The one which probably applies to OP is that prop tax for a given owner can only increase at a low rate ever since Proposition 13 passed in 1978. So for example Warren Buffett famously told the WSJ* ca. 2003 that his $4mil home in Laguna Beach had prop tax of $2,264 and I believe the rate of increase of assessed is limited to 2% pa so if Buffett still owns it the prop tax might still be only a little over $3k, but the house perhaps a multiple of $4mil now :happy . IOW you could be paying $3k prop tax on just about any house in CA if you've owned it long enough.

However while I live in NJ which OP specifically made an exception for, I do think it's somewhat limited consideration and experience that would make him say tax differences among states are not often significant. The fact he pays more prop tax in SC than CA again would seem to be due to a unique quirk in CA property tax. And if you are fortunate enough to have a high income in retirement, no state income tax v even a middle of road state income tax can be very significant also. Moreover as I mentioned and I think is mainly but not entirely understood on the thread, there's a big implicit cost to tying up say $2mil in a house when a similar size one would be $500k in another locale, and the other $1.5mil would be generating income in financial assets, whereas it's just imputed rent you're consuming while you live in the $2mil house. That's not 'tax' per se but it's highly significant moving from a non tiny house in any VHCOL area to same size house in L/MCOL area. OTOH tax systems tend to be designed to converge to low tax for low levels of income or prop value so for other people it could be a negligible savings to move from a high tax state. In fact it could be a cost if the person is benefiting from a state or local subsidy (subsidized senior housing for example) they might not get in the lower tax state. It's obviously individual rather than any rule that 'it all tends to come out about even with a few exceptions'. In more than a few cases it's very far from even.

*in link Buffett claimed WSJ misrepresented his comments by not citing his other $2mil house in Laguna Beach where he paid $12k prop tax, because he bought it 20 yrs later, but confirms the $4mil one owed only ~$2k
http://www.wealthandwant.com/docs/Buffett_Prop13.html
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Artful Dodger
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Re: Is it worth to relocate for retirement?

Post by Artful Dodger »

I apologize if someone else has already posted this. I didn't read through all 110 posts.

I live in a fairly high tax state, Illinois. But, at least for now, all retirement income is exempt from state taxes. If you're like us, and most of your savings are in IRAs and 401ks, the income isn't taxed. Neither is social security or any pension income. I'm still working, so paying some state tax at a 5% rate, but am also doing some large ROTH conversions which are exempt from the state tax but subject to federal tax. I figure this gives me more wiggle room to reduce federal tax in the future while taking advantage of the current lower rates.

Related to this, last time I checked most states exempted social security (about 3/4 I believe) from their taxes, and many exempted all or a portion of pension income. So, I think you do have to investigate what is and isn't taxed. Of course, if a large percent of your income derives from taxable investments, and won't be shielded from state taxes, that would favor the financial advantage of relocating.

Our property taxes are high as a percentage of the home value, but we live in an area with reasonable home prices, and recently getting the exemption for being 65 has lowered us some. We don't have a personal property tax, like our neighbors in Missouri. Missouri has lower gas taxes, so filing up when we're in St. Louis saves 20 cents a gallon. Sales taxes are similar for both metro areas, but I'm sure there is some savings once you get out to more rural areas.

And to second a comment I read about medical care, we live within 30 minutes of top notch medical facilities, and that's important as you age.

If there were good financial reasons to relocate AND quality of life advantages (which I won't address since you asked not to) then I'd be more likely to consider relocation.
palanzo
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Re: Is it worth to relocate for retirement?

Post by palanzo »

JackoC wrote: Wed Sep 16, 2020 2:33 pm
palanzo wrote: Wed Sep 16, 2020 1:35 pm
vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k.
Where in CA did you live to have a 3K property tax?
Seems like maybe 1/2 of housing related posts on this forum have something to do with CA, so even people who'd never move there (I lived in LA for a short time when young, liked it to live for a short time but never on a list of places I'd live permanently) get to know the various quirks of CA reading threads here. The one which probably applies to OP is that prop tax for a given owner can only increase at a low rate ever since Proposition 13 passed in 1978. So for example Warren Buffett famously told the WSJ* ca. 2003 that his $4mil home in Laguna Beach had prop tax of $2,264 and I believe the rate of increase of assessed is limited to 2% pa so if Buffett still owns it the prop tax might still be only a little over $3k, but the house perhaps a multiple of $4mil now :happy . IOW you could be paying $3k prop tax on just about any house in CA if you've owned it long enough.

However while I live in NJ which OP specifically made an exception for, I do think it's somewhat limited consideration and experience that would make him say tax differences among states are not often significant. The fact he pays more prop tax in SC than CA again would seem to be due to a unique quirk in CA property tax. And if you are fortunate enough to have a high income in retirement, no state income tax v even a middle of road state income tax can be very significant also. Moreover as I mentioned and I think is mainly but not entirely understood on the thread, there's a big implicit cost to tying up say $2mil in a house when a similar size one would be $500k in another locale, and the other $1.5mil would be generating income in financial assets, whereas it's just imputed rent you're consuming while you live in the $2mil house. That's not 'tax' per se but it's highly significant moving from a non tiny house in any VHCOL area to same size house in L/MCOL area. OTOH tax systems tend to be designed to converge to low tax for low levels of income or prop value so for other people it could be a negligible savings to move from a high tax state. In fact it could be a cost if the person is benefiting from a state or local subsidy (subsidized senior housing for example) they might not get in the lower tax state. It's obviously individual rather than any rule that 'it all tends to come out about even with a few exceptions'. In more than a few cases it's very far from even.

*in link Buffett claimed WSJ misrepresented his comments by not citing his other $2mil house in Laguna Beach where he paid $12k prop tax, because he bought it 20 yrs later, but confirms the $4mil one owed only ~$2k
http://www.wealthandwant.com/docs/Buffett_Prop13.html
Let's see what the OP says if he replies. Let's say the house was bought in 1978 (bonus points if you know why I picked that year), so for 3K property tax today the house would have been bought for about 108K in 1978. Possible in some areas.
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LilyFleur
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Re: Is it worth to relocate for retirement?

Post by LilyFleur »

Tingting1013 wrote: Tue Sep 15, 2020 6:28 pm
NJdad6 wrote: Tue Sep 15, 2020 4:12 pm Savings would come from being able to buy a comparable home for about 20%-30% less, and either significantly lower property taxes (in some cases 70%-80% less) with a similar or lower state tax or a higher property tax (still 40-50% less) and no state tax.
Here is my problem. After decades of sacrificing in a smaller than desired house in VHCOL CA, the last thing we want to do is buy a “comparable home” in retirement. If we’re going to move, we’re going to improve our quality of life, isn’t that the whole point?

And so when I look at $2M houses in the Midwest to replace my $2M house in the Bay Area, the increase in space is obvious but the property taxes double or even triple what I pay in CA. Income taxes are also around 5-6% flat rate, not much lower than my CA income taxes.

In the end I don’t save much money at all by moving.
I could sell my 1000 square foot condo in a beach city and buy a McMansion in Texas, but my hands are getting arthritic. I don't want to use the remaining mileage in my hands to maintain a bigger house and have them hurt more intensely in cold weather. For now, I'm staying in my small home in one of the best climates in the world. My young adult children are the wild card, though. When they finish their graduate degrees, who knows where they will end up?
P.S. I have owned my condo for nine years and I pay about $3600 a year in property taxes. But anywhere I would move, I would pay more to buy a property than I paid nine years ago for this property.
NJdad6
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Re: Is it worth to relocate for retirement?

Post by NJdad6 »

Tingting1013 wrote: Tue Sep 15, 2020 6:28 pm
NJdad6 wrote: Tue Sep 15, 2020 4:12 pm Savings would come from being able to buy a comparable home for about 20%-30% less, and either significantly lower property taxes (in some cases 70%-80% less) with a similar or lower state tax or a higher property tax (still 40-50% less) and no state tax.
Here is my problem. After decades of sacrificing in a smaller than desired house in VHCOL CA, the last thing we want to do is buy a “comparable home” in retirement. If we’re going to move, we’re going to improve our quality of life, isn’t that the whole point?

And so when I look at $2M houses in the Midwest to replace my $2M house in the Bay Area, the increase in space is obvious but the property taxes double or even triple what I pay in CA. Income taxes are also around 5-6% flat rate, not much lower than my CA income taxes.

In the end I don’t save much money at all by moving.
Everyone’s situation is different. The numbers I posted are real savings based on my situation. Not knowing your details, but depending on where you move to you can get a comparable or nicer place for $1 million or less. Property taxes may go up but you might save on state taxes.

For example if you moved to the Knoxville area of TN you can buy a very nice 6 bedroom 4000sf house for $859k. Property taxes are $4300/yr and no state tax. You might save a bunch and bank over $1 million.

You may not want to live there but you could probably save money if you wanted to.
emoore
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Re: Is it worth to relocate for retirement?

Post by emoore »

markcoop wrote: Wed Sep 16, 2020 6:47 am What I have wondered about is living in multiple locations. We live in the NY and probably still want to be in this area some of the time in retirement. I am considering moving to Florida and living there half the year plus 1 day and spending the rest of our time in other places - probably 3-4 months in NY and 2-3 months in CO. That way you get the best of all worlds - low state taxes, good weather when you want it, still connected to past bases. Not sure how to make that work with housing yet.
I looking at doing the same thing. But I don't think I'll buy houses in multiple states. Just one home state (Colorado) and then 2-4 months in other states with short term rentals or VRBO. Still think it's cheaper than owning a 2nd or 3rd home.
chipperd
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Re: Is it worth to relocate for retirement?

Post by chipperd »

illumination wrote: Wed Sep 16, 2020 2:16 pm
chipperd wrote: Wed Sep 16, 2020 5:59 am
illumination wrote: Sat Aug 22, 2020 11:38 am You need to figure out what your retirement will look like in terms of income, but I don't really buy into the "it all evens out" arguments regarding certain states and how they tax people. There's an ENORMOUS difference between what you will pay in taxes to live in somewhere like CA or MA versus Texas or Florida, especially if you are in a higher bracket. I understand it's not lower on every single thing, but looking holistically, it's simply lower or higher because that's what the voters in those states usually want. And usually higher tax states go hand-in-hand with higher cost of living. If you're not working, you're not getting the benefit of a higher salary in those areas.

Where I think it's splitting hairs are those "middle of the road" states and you make a lateral move to something similar. Or if you see yourself in a lower bracket for most of your retirement. But on the extremes, it makes a huge difference.
Where the OP lives, Mass, is a middle of the road tax state

I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million. So if your estate is $1,000,001, the entire estate is then subject to the first estate tax bracket.

https://smartasset.com/estate-planning/ ... at%2016%25
Overall tax burden is the issue. According to different sources, here is where Mass is ranked nationally:

22nd (https://wallethub.com/edu/states-with-h ... den/20494/)
22nd (https://www.kiplinger.com/slideshow/tax ... index.html)
20th (https://worldpopulationreview.com/state ... n-by-state)
40th (https://money.cnn.com/pf/features/lists ... total.html)
illumination
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Re: Is it worth to relocate for retirement?

Post by illumination »

chipperd wrote: Wed Sep 16, 2020 5:15 pm
illumination wrote: Wed Sep 16, 2020 2:16 pm
chipperd wrote: Wed Sep 16, 2020 5:59 am
illumination wrote: Sat Aug 22, 2020 11:38 am You need to figure out what your retirement will look like in terms of income, but I don't really buy into the "it all evens out" arguments regarding certain states and how they tax people. There's an ENORMOUS difference between what you will pay in taxes to live in somewhere like CA or MA versus Texas or Florida, especially if you are in a higher bracket. I understand it's not lower on every single thing, but looking holistically, it's simply lower or higher because that's what the voters in those states usually want. And usually higher tax states go hand-in-hand with higher cost of living. If you're not working, you're not getting the benefit of a higher salary in those areas.

Where I think it's splitting hairs are those "middle of the road" states and you make a lateral move to something similar. Or if you see yourself in a lower bracket for most of your retirement. But on the extremes, it makes a huge difference.
Where the OP lives, Mass, is a middle of the road tax state

I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million. So if your estate is $1,000,001, the entire estate is then subject to the first estate tax bracket.

https://smartasset.com/estate-planning/ ... at%2016%25
Overall tax burden is the issue. According to different sources, here is where Mass is ranked nationally:

22nd (https://wallethub.com/edu/states-with-h ... den/20494/)
22nd (https://www.kiplinger.com/slideshow/tax ... index.html)
20th (https://worldpopulationreview.com/state ... n-by-state)
40th (https://money.cnn.com/pf/features/lists ... total.html)

Some of these rankings though are absurd, like Kiplinger saying California is #5 on the lowest taxed states. And Illinois and New Jersey is ranked "better" than Texas or Tennessee? That's absolutely laughable.

Much of this analysis is where you fall as an individual. I'm sure many stereotypical "high tax" states aren't so bad in certain income ranges. But some states really whack you when you are on the higher end.

I guess everyone has different priorities, but some of these tax policies (like Mass or CA) would be a deal breaker for me on their tax policies.
drk
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Re: Is it worth to relocate for retirement?

Post by drk »

illumination wrote: Wed Sep 16, 2020 2:16 pm I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million. So if your estate is $1,000,001, the entire estate is then subject to the first estate tax bracket.
This is irrelevant for a retiree with no heirs looking for somewhere to live.
illumination
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Re: Is it worth to relocate for retirement?

Post by illumination »

drk wrote: Wed Sep 16, 2020 7:21 pm
illumination wrote: Wed Sep 16, 2020 2:16 pm I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million. So if your estate is $1,000,001, the entire estate is then subject to the first estate tax bracket.
This is irrelevant for a retiree with no heirs looking for somewhere to live.

It's just an example of why I would not classify it as "average" in the taxation department as a broader question and just specific to the OP. It's awfully punitive for some people, at least in this forum.

Just like someone that's owned the same home in CA for 40 years probably loves CA taxes and doesn't see what the big deal is, someone that just moved there, not so much.
chw
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Re: Is it worth to relocate for retirement?

Post by chw »

Depends on where you go. The Taxachusetts moniker is used mainly as a cute slur on what is perceived as a very high tax rate by folks outside the state that don’t realize they likely may have a higher tax burden in their state than MA. When all taxes are factored in, Massachusetts ranks about in the middle of the pack nationally. Factor in the culture (YMMV), top flight health care (including public health insurance should ACA be repealed), and strong retirement communities in Western MA and Cape Cod, I think one can make a case to stay. Granted, one may want to be a snowbird for 1-2 months in winter, but i personally would not leave the area for most other regions of the US.
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LilyFleur
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Re: Is it worth to relocate for retirement?

Post by LilyFleur »

dang1 wrote: Sat Aug 22, 2020 4:16 pm All these mentions of what folks are paying in property tax has made me jealous! I pay $14k/year here in Calif and that is with the increases capped due to prop. 13. We've been in this house for ~20 years, but someone moving in now would pay even more. It was a bit more bearable before SALT went away, but now..uggh.
Wow, you must live in a huge house in a very pricey area.

I bought 9 years ago, live in a condo a mile and a half from the beach, in a VHCOL area, and pay $3600/year in property taxes, in California.
Tingting1013
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Re: Is it worth to relocate for retirement?

Post by Tingting1013 »

LilyFleur wrote: Wed Sep 16, 2020 7:39 pm
dang1 wrote: Sat Aug 22, 2020 4:16 pm All these mentions of what folks are paying in property tax has made me jealous! I pay $14k/year here in Calif and that is with the increases capped due to prop. 13. We've been in this house for ~20 years, but someone moving in now would pay even more. It was a bit more bearable before SALT went away, but now..uggh.
Wow, you must live in a huge house in a very pricey area.

I bought 9 years ago, live in a condo a mile and a half from the beach, in a VHCOL area, and pay $3600/year in property taxes, in California.
Where in CA could you find a beach-adjacent condo for $300k nine years ago?
GreenLawn
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Re: Is it worth to relocate for retirement?

Post by GreenLawn »

Tingting1013 wrote: Tue Sep 15, 2020 6:28 pm
NJdad6 wrote: Tue Sep 15, 2020 4:12 pm Savings would come from being able to buy a comparable home for about 20%-30% less, and either significantly lower property taxes (in some cases 70%-80% less) with a similar or lower state tax or a higher property tax (still 40-50% less) and no state tax.
Here is my problem. After decades of sacrificing in a smaller than desired house in VHCOL CA, the last thing we want to do is buy a “comparable home” in retirement. If we’re going to move, we’re going to improve our quality of life, isn’t that the whole point?

And so when I look at $2M houses in the Midwest to replace my $2M house in the Bay Area, the increase in space is obvious but the property taxes double or even triple what I pay in CA. Income taxes are also around 5-6% flat rate, not much lower than my CA income taxes.

In the end I don’t save much money at all by moving.
I haven't read this whole thread so maybe you prefer the midwest, but down here in Florida I'm living in a 2000 sq ft house on a lake that Zillow says is 254k. Not big enough for you I know, so I looked up a house a few doors down. 2700 sq ft, 5 bed, 3 ba for 352k. Also on a lake. Property tax around 4k/year.

You could sell your place for 2 million, move down here and buy the 2700 sq ft house for 352k. You'll want some company down here, so you can buy the house I'm living in for 254k and give it to one of your friends for free to induce them to move down here. And you'd still have well over a million bucks left.

Did I forget to mention Florida has no income tax?

So, when do you start packing? Better give your friend a heads up too, it's lake life for the two of you!
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LilyFleur
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Re: Is it worth to relocate for retirement?

Post by LilyFleur »

Tingting1013 wrote: Wed Sep 16, 2020 8:30 pm
LilyFleur wrote: Wed Sep 16, 2020 7:39 pm
dang1 wrote: Sat Aug 22, 2020 4:16 pm All these mentions of what folks are paying in property tax has made me jealous! I pay $14k/year here in Calif and that is with the increases capped due to prop. 13. We've been in this house for ~20 years, but someone moving in now would pay even more. It was a bit more bearable before SALT went away, but now..uggh.
Wow, you must live in a huge house in a very pricey area.

I bought 9 years ago, live in a condo a mile and a half from the beach, in a VHCOL area, and pay $3600/year in property taxes, in California.
Where in CA could you find a beach-adjacent condo for $300k nine years ago?
Well, it is not on the beach. It is a mile and a half from the beach. It was a total fixer. Southern California (Orange County) coastal town but not south county. Actually paid about $250k but had to sink $10,000 into it before move-in just to make it livable. It stunk to high heaven of cat pee and cigarette smoke.
surfstar
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Re: Is it worth to relocate for retirement?

Post by surfstar »

Tingting1013 wrote: Wed Sep 16, 2020 8:30 pm
LilyFleur wrote: Wed Sep 16, 2020 7:39 pm
dang1 wrote: Sat Aug 22, 2020 4:16 pm All these mentions of what folks are paying in property tax has made me jealous! I pay $14k/year here in Calif and that is with the increases capped due to prop. 13. We've been in this house for ~20 years, but someone moving in now would pay even more. It was a bit more bearable before SALT went away, but now..uggh.
Wow, you must live in a huge house in a very pricey area.

I bought 9 years ago, live in a condo a mile and a half from the beach, in a VHCOL area, and pay $3600/year in property taxes, in California.
Where in CA could you find a beach-adjacent condo for $300k nine years ago?
Guessing Oceanside could have fit.
I know for sure that Port Hueneme would have been much less than $300k at that time. Just a few years ago even. Decent surfing beach, but otherwise I wouldn't want to live there unfortunately.
chipperd
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Re: Is it worth to relocate for retirement?

Post by chipperd »

illumination wrote: Wed Sep 16, 2020 7:14 pm
chipperd wrote: Wed Sep 16, 2020 5:15 pm
illumination wrote: Wed Sep 16, 2020 2:16 pm
chipperd wrote: Wed Sep 16, 2020 5:59 am
illumination wrote: Sat Aug 22, 2020 11:38 am You need to figure out what your retirement will look like in terms of income, but I don't really buy into the "it all evens out" arguments regarding certain states and how they tax people. There's an ENORMOUS difference between what you will pay in taxes to live in somewhere like CA or MA versus Texas or Florida, especially if you are in a higher bracket. I understand it's not lower on every single thing, but looking holistically, it's simply lower or higher because that's what the voters in those states usually want. And usually higher tax states go hand-in-hand with higher cost of living. If you're not working, you're not getting the benefit of a higher salary in those areas.

Where I think it's splitting hairs are those "middle of the road" states and you make a lateral move to something similar. Or if you see yourself in a lower bracket for most of your retirement. But on the extremes, it makes a huge difference.
Where the OP lives, Mass, is a middle of the road tax state

I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million. So if your estate is $1,000,001, the entire estate is then subject to the first estate tax bracket.

https://smartasset.com/estate-planning/ ... at%2016%25
Overall tax burden is the issue. According to different sources, here is where Mass is ranked nationally:

22nd (https://wallethub.com/edu/states-with-h ... den/20494/)
22nd (https://www.kiplinger.com/slideshow/tax ... index.html)
20th (https://worldpopulationreview.com/state ... n-by-state)
40th (https://money.cnn.com/pf/features/lists ... total.html)

Some of these rankings though are absurd, like Kiplinger saying California is #5 on the lowest taxed states. And Illinois and New Jersey is ranked "better" than Texas or Tennessee? That's absolutely laughable.

Much of this analysis is where you fall as an individual. I'm sure many stereotypical "high tax" states aren't so bad in certain income ranges. But some states really whack you when you are on the higher end.

I guess everyone has different priorities, but some of these tax policies (like Mass or CA) would be a deal breaker for me on their tax policies.
While I certainly don't agree these rankings are "absurd" or "laughable" because they don't fit your narrative(unless you would like to support that statement with some kind of research), I do agree that YMMV. :sharebeer
vested1
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Re: Is it worth to relocate for retirement?

Post by vested1 »

palanzo wrote: Wed Sep 16, 2020 3:12 pm
JackoC wrote: Wed Sep 16, 2020 2:33 pm
palanzo wrote: Wed Sep 16, 2020 1:35 pm
vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k.
Where in CA did you live to have a 3K property tax?
Seems like maybe 1/2 of housing related posts on this forum have something to do with CA, so even people who'd never move there (I lived in LA for a short time when young, liked it to live for a short time but never on a list of places I'd live permanently) get to know the various quirks of CA reading threads here. The one which probably applies to OP is that prop tax for a given owner can only increase at a low rate ever since Proposition 13 passed in 1978. So for example Warren Buffett famously told the WSJ* ca. 2003 that his $4mil home in Laguna Beach had prop tax of $2,264 and I believe the rate of increase of assessed is limited to 2% pa so if Buffett still owns it the prop tax might still be only a little over $3k, but the house perhaps a multiple of $4mil now :happy . IOW you could be paying $3k prop tax on just about any house in CA if you've owned it long enough.

However while I live in NJ which OP specifically made an exception for, I do think it's somewhat limited consideration and experience that would make him say tax differences among states are not often significant. The fact he pays more prop tax in SC than CA again would seem to be due to a unique quirk in CA property tax. And if you are fortunate enough to have a high income in retirement, no state income tax v even a middle of road state income tax can be very significant also. Moreover as I mentioned and I think is mainly but not entirely understood on the thread, there's a big implicit cost to tying up say $2mil in a house when a similar size one would be $500k in another locale, and the other $1.5mil would be generating income in financial assets, whereas it's just imputed rent you're consuming while you live in the $2mil house. That's not 'tax' per se but it's highly significant moving from a non tiny house in any VHCOL area to same size house in L/MCOL area. OTOH tax systems tend to be designed to converge to low tax for low levels of income or prop value so for other people it could be a negligible savings to move from a high tax state. In fact it could be a cost if the person is benefiting from a state or local subsidy (subsidized senior housing for example) they might not get in the lower tax state. It's obviously individual rather than any rule that 'it all tends to come out about even with a few exceptions'. In more than a few cases it's very far from even.

*in link Buffett claimed WSJ misrepresented his comments by not citing his other $2mil house in Laguna Beach where he paid $12k prop tax, because he bought it 20 yrs later, but confirms the $4mil one owed only ~$2k
http://www.wealthandwant.com/docs/Buffett_Prop13.html
Let's see what the OP says if he replies. Let's say the house was bought in 1978 (bonus points if you know why I picked that year), so for 3K property tax today the house would have been bought for about 108K in 1978. Possible in some areas.
Monterey, which has a high cost of living. We bought 25 years before we sold. Purchase price was 185k, sales price last year was 675k. At the top of the market in 2007 the house was appraised for 800k. 3 bed 2 bath, 62 years old 1300 sq ft.

Some members seem to have identified me as the OP, which I'm not, but rather just responded to the OP's question about individuals who relocated, asking for their perspective. The reason I was paying so relatively little in property tax in CA was due to prop 13, as others have surmised. 25 years of maximum mandated increases raised our property tax from around $1,800 to just over $3,000. If I were to buy a comparable house on a comparable lake to what we bought in SC as compared to one in CA it would cost about 5 mil. Property taxes would be approx $39,100. I picked the zip code of Lake Almanor in CA, 96137, as a comparison with a 5 million dollar house. Every county sets it own property tax so percentages vary, like most everywhere else.

https://smartasset.com/taxes/california ... Yh6Qykv5Aq

California is ranked 16th lowest in property tax in the nation, mainly because of prop 13. Regardless of the cost savings, the overall effect of prop 13 have been negative in my opinion, with far less revenue allocated to schools. I didn't feel strongly enough about that aspect to refuse the savings however, because I am realistic and occasionally succumb to my personal slice of greed.

https://wallethub.com/edu/states-with-t ... xes/11585/

Our State taxes were low in 2018 and 2019 because we're retired and because I managed them with a modicum of skill. State taxes are much less controllable when you are working in CA, just like everywhere else. The OP's question was about retirement location and expenses however, so that was what I was referring to.

Another member asked if if was the same poster who complained about the cost to remove trees on my property, which has about 100 trees. To be clear, I wasn't complaining, but was commenting how inexpensive it was to remove trees in SC as compared to CA. We've removed 13 trees during the last year which either died or had fallen. The total cost for their removal was about $1,300. That is an aberration, even here. In CA we had only 2 trees removed from our property that cost many multiples of that, due to the requirement to purchase a permit and get it approved by an arborist, in addition to the labor of the tree service doing the work. That's not a complaint about what we paid in SC, but rather a comparison.

In my opinion it's impossible to calculate every aspect of COL or expense when considering relocation, and sites like Kiplinger's that put out articles on the best States in which to retire leave out huge swaths of information that can be consequential. If you are only relocating to lower expenses at the sacrifice of isolating yourself from family and freinds, you might want to reconsider. Money isn't everything. For us, it was the fulfillment of a decades long desire to live the lifestyle that we had only enjoyed on limited vacations. Since we have family here as well we jumped at the chance when it presented itself.
Mr. Rumples
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Re: Is it worth to relocate for retirement?

Post by Mr. Rumples »

We relocated after retirement so he could start his dream job and I got a part time job at the state legislature. When he died unexpectedly, I moved back to be with family.
JackoC
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Re: Is it worth to relocate for retirement?

Post by JackoC »

illumination wrote: Wed Sep 16, 2020 7:14 pm
chipperd wrote: Wed Sep 16, 2020 5:15 pm
illumination wrote: Wed Sep 16, 2020 2:16 pm
chipperd wrote: Wed Sep 16, 2020 5:59 am
illumination wrote: Sat Aug 22, 2020 11:38 am You need to figure out what your retirement will look like in terms of income, but I don't really buy into the "it all evens out" arguments regarding certain states and how they tax people. There's an ENORMOUS difference between what you will pay in taxes to live in somewhere like CA or MA versus Texas or Florida, especially if you are in a higher bracket.

Where I think it's splitting hairs are those "middle of the road" states and you make a lateral move to something similar. Or if you see yourself in a lower bracket for most of your retirement. But on the extremes, it makes a huge difference.
Where the OP lives, Mass, is a middle of the road tax state
I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million.
Overall tax burden is the issue. According to different sources, here is where Mass is ranked nationally:

22nd (https://wallethub.com/edu/states-with-h ... den/20494/)
22nd (https://www.kiplinger.com/slideshow/tax ... index.html)
20th (https://worldpopulationreview.com/state ... n-by-state)
40th (https://money.cnn.com/pf/features/lists ... total.html)
Some of these rankings though are absurd, like Kiplinger saying California is #5 on the lowest taxed states. And Illinois and New Jersey is ranked "better" than Texas or Tennessee? That's absolutely laughable.

Much of this analysis is where you fall as an individual. I'm sure many stereotypical "high tax" states aren't so bad in certain income ranges. But some states really whack you when you are on the higher end.
Yes some of those rankings are obviously ridiculous for particular people. For example Wyoming on CNN list (based on 18 yr old information from the 'MA taxpayer's foundation' :| ) as third highest taxed...with no income tax: ridiculous in case of high income people where income taxes tend to dominate, especially given the tighter limit on deducting state income tax on federal tax since 2018, super-especially for people who 'qualify' for 'special' ~9%+ brackets certain states now have for very high income. And note the original poster said MA was punishing to people *in high income bracket*. That said, the various often contradictory, sometimes ridiculous 'rankings' do illustrate the pitfalls of broad brushing states without considering the individual situation.

Another big problem with those rankings, and it's appeared as issue already in the thread: you can't really separate property tax burden from real estate cost. Our property taxes as % of market value (in NJ) are right around the US national average. But the absolute number is eye watering because the market value is so high. And not because it's a big house, it's smaller than US national average size for single family homes. It would be pedantic to say our 'tax burden went up' if we moved to any of innumerable areas in the country where we could get a nice house same size for 25% as much just because we ended up paying say 30% as much property tax. And again that's besides all the capital we have tied up in the house a lot of the return of which we're consuming just by living here, 3/4's of it could instead be generating cash return we could spend on other things. We'd be multiple $10k's /yr financially better off in a moderate cost area in a no income tax state than where we are, and any 'ranking' which implies otherwise is wrong as it applies to us (whether we'll actually move given all considerations, financial and non, is another question). But again at the other extreme, NJ doesn't tax Social Security. And our city has seemingly reasonable subsidized senior housing, there's a county senior meal program, etc. If SS is your only income while benefiting from state/locally funded subsidies to get around real estate cost in particular, this could be a reasonable out of pocket cost place to retire.
NJdad6
Posts: 252
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Re: Is it worth to relocate for retirement?

Post by NJdad6 »

JackoC wrote: Thu Sep 17, 2020 9:06 am
illumination wrote: Wed Sep 16, 2020 7:14 pm
chipperd wrote: Wed Sep 16, 2020 5:15 pm
illumination wrote: Wed Sep 16, 2020 2:16 pm
chipperd wrote: Wed Sep 16, 2020 5:59 am
Where the OP lives, Mass, is a middle of the road tax state
I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million.
Overall tax burden is the issue. According to different sources, here is where Mass is ranked nationally:

22nd (https://wallethub.com/edu/states-with-h ... den/20494/)
22nd (https://www.kiplinger.com/slideshow/tax ... index.html)
20th (https://worldpopulationreview.com/state ... n-by-state)
40th (https://money.cnn.com/pf/features/lists ... total.html)
Some of these rankings though are absurd, like Kiplinger saying California is #5 on the lowest taxed states. And Illinois and New Jersey is ranked "better" than Texas or Tennessee? That's absolutely laughable.

Much of this analysis is where you fall as an individual. I'm sure many stereotypical "high tax" states aren't so bad in certain income ranges. But some states really whack you when you are on the higher end.
Yes some of those rankings are obviously ridiculous for particular people. For example Wyoming on CNN list (based on 18 yr old information from the 'MA taxpayer's foundation' :| ) as third highest taxed...with no income tax: ridiculous in case of high income people where income taxes tend to dominate, especially given the tighter limit on deducting state income tax on federal tax since 2018, super-especially for people who 'qualify' for 'special' ~9%+ brackets certain states now have for very high income. And note the original poster said MA was punishing to people *in high income bracket*. That said, the various often contradictory, sometimes ridiculous 'rankings' do illustrate the pitfalls of broad brushing states without considering the individual situation.

Another big problem with those rankings, and it's appeared as issue already in the thread: you can't really separate property tax burden from real estate cost. Our property taxes as % of market value (in NJ) are right around the US national average. But the absolute number is eye watering because the market value is so high. And not because it's a big house, it's smaller than US national average size for single family homes. It would be pedantic to say our 'tax burden went up' if we moved to any of innumerable areas in the country where we could get a nice house same size for 25% as much just because we ended up paying say 30% as much property tax. And again that's besides all the capital we have tied up in the house a lot of the return of which we're consuming just by living here, 3/4's of it could instead be generating cash return we could spend on other things. We'd be multiple $10k's /yr financially better off in a moderate cost area in a no income tax state than where we are, and any 'ranking' which implies otherwise is wrong as it applies to us (whether we'll actually move given all considerations, financial and non, is another question). But again at the other extreme, NJ doesn't tax Social Security. And our city has seemingly reasonable subsidized senior housing, there's a county senior meal program, etc. If SS is your only income while benefiting from state/locally funded subsidies to get around real estate cost in particular, this could be a reasonable out of pocket cost place to retire.
My property taxes in NJ are significantly higher than any of the places I am looking to move to. Same priced house in these areas (desirable higher COL areas in lower or average COL states) have property taxes 50-75% less. This is a five figure savings. Savings are even bigger given that I can buy a comparable home for about 20% less.
John88
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Re: Is it worth to relocate for retirement?

Post by John88 »

Father moved to Austin a few years ago. Moved from a nice 2,000 sf home in San Mateo County to Austin, 3,000 SF in a gated community backing on a golf course with a pool. Yes home is much nicer and cheaper. He had lived in San Mateo County for 40+ years so very low property tax base. He states his monthly expenses are much higher. Property taxes much higher ($15K), HOA expense ($3K), utilities much higher because of pool water evaporation and AC on a lot of the time. Also unexpected labor for simple home repairs about the same. He thinks because of the gated high end neighborhood, service people do not give them a break.

Yes gas is less expensive but they drive a lot more. Everything (stores, doctor, etc.) is spaced out and almost no one walks or bikes especially in the hot months.

He had maybe $800K or so in extra cash after sale and purchase so enough to offset the extra costs but not much left over. Major trade offs, San Mateo county has one of the most moderate climates in the country while in Austin he says they rarely go outside in the summer months because of heat, humidity, and/or mosquitoes. Also not as much to do versus the Bay Area.

Personally I prefer a more year round moderate climate even if my home is smaller, older, and more expensive. I’m an outdoor person and enjoy year-round gardening and recreation but most important is close proximity to family especially our young grandchildren. Hard to put a value on being available when grandchildren want to see or stay with us.
Tingting1013
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Re: Is it worth to relocate for retirement?

Post by Tingting1013 »

John88 wrote: Thu Sep 17, 2020 4:14 pm Father moved to Austin a few years ago. Moved from a nice 2,000 sf home in San Mateo County to Austin, 3,000 SF in a gated community backing on a golf course with a pool. Yes home is much nicer and cheaper. He had lived in San Mateo County for 40+ years so very low property tax base. He states his monthly expenses are much higher. Property taxes much higher ($15K), HOA expense ($3K), utilities much higher because of pool water evaporation and AC on a lot of the time. Also unexpected labor for simple home repairs about the same. He thinks because of the gated high end neighborhood, service people do not give them a break.

Yes gas is less expensive but they drive a lot more. Everything (stores, doctor, etc.) is spaced out and almost no one walks or bikes especially in the hot months.

He had maybe $800K or so in extra cash after sale and purchase so enough to offset the extra costs but not much left over. Major trade offs, San Mateo county has one of the most moderate climates in the country while in Austin he says they rarely go outside in the summer months because of heat, humidity, and/or mosquitoes. Also not as much to do versus the Bay Area.

Personally I prefer a more year round moderate climate even if my home is smaller, older, and more expensive. I’m an outdoor person and enjoy year-round gardening and recreation but most important is close proximity to family especially our young grandchildren. Hard to put a value on being available when grandchildren want to see or stay with us.
Thank you for bringing some reality to the thread.
rich126
Posts: 2001
Joined: Thu Mar 01, 2018 4:56 pm

Re: Is it worth to relocate for retirement?

Post by rich126 »

For some people this would work great and others not so good. I suppose if you were in serious financial distress in retirement it could definitely help.
I'm selling my house now and will rent for a while back east while finishing my work career. Then decide what to do. I thought I'd retire in AZ but I'm not so sure now. I've only known 2 places long term (AZ and MD) and they both have pros and cons. Right now AZ is gone off the charts costs wise, especially with housing (in my case probably a good 1/3 higher than MD for similar house/neighborhood) and I'd expect it to correct.

I think you need to live where you are happy. For some that is with/near family and others it is weather or activities. Having family around in times of medical needs or when a spouse passes can be very important. Being older and alone can be terrible for some people.

Like many things, no absolute answer.
JackoC
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Re: Is it worth to relocate for retirement?

Post by JackoC »

NJdad6 wrote: Thu Sep 17, 2020 10:05 am
JackoC wrote: Thu Sep 17, 2020 9:06 am
illumination wrote: Wed Sep 16, 2020 7:14 pm
chipperd wrote: Wed Sep 16, 2020 5:15 pm
illumination wrote: Wed Sep 16, 2020 2:16 pm
I would disagree, "Taxachusetts" has some pretty harsh taxes for certain people. The Estate Tax is especially burdensome, up to 16%, and the ENTIRE estate starts getting taxed if you're only $1 over $1 million.
Overall tax burden is the issue. According to different sources, here is where Mass is ranked nationally:

22nd (https://wallethub.com/edu/states-with-h ... den/20494/)
22nd (https://www.kiplinger.com/slideshow/tax ... index.html)
20th (https://worldpopulationreview.com/state ... n-by-state)
40th (https://money.cnn.com/pf/features/lists ... total.html)
Some of these rankings though are absurd, like Kiplinger saying California is #5 on the lowest taxed states. And Illinois and New Jersey is ranked "better" than Texas or Tennessee? That's absolutely laughable.

Much of this analysis is where you fall as an individual. I'm sure many stereotypical "high tax" states aren't so bad in certain income ranges. But some states really whack you when you are on the higher end.
Yes some of those rankings are obviously ridiculous for particular people. For example Wyoming on CNN list (based on 18 yr old information from the 'MA taxpayer's foundation' :| ) as third highest taxed...with no income tax: ridiculous in case of high income people where income taxes tend to dominate, especially given the tighter limit on deducting state income tax on federal tax since 2018, super-especially for people who 'qualify' for 'special' ~9%+ brackets certain states now have for very high income. And note the original poster said MA was punishing to people *in high income bracket*. That said, the various often contradictory, sometimes ridiculous 'rankings' do illustrate the pitfalls of broad brushing states without considering the individual situation.

Another big problem with those rankings, and it's appeared as issue already in the thread: you can't really separate property tax burden from real estate cost. Our property taxes as % of market value (in NJ) are right around the US national average. But the absolute number is eye watering because the market value is so high. And not because it's a big house, it's smaller than US national average size for single family homes. It would be pedantic to say our 'tax burden went up' if we moved to any of innumerable areas in the country where we could get a nice house same size for 25% as much just because we ended up paying say 30% as much property tax. And again that's besides all the capital we have tied up in the house a lot of the return of which we're consuming just by living here, 3/4's of it could instead be generating cash return we could spend on other things. We'd be multiple $10k's /yr financially better off in a moderate cost area in a no income tax state than where we are, and any 'ranking' which implies otherwise is wrong as it applies to us (whether we'll actually move given all considerations, financial and non, is another question). But again at the other extreme, NJ doesn't tax Social Security. And our city has seemingly reasonable subsidized senior housing, there's a county senior meal program, etc. If SS is your only income while benefiting from state/locally funded subsidies to get around real estate cost in particular, this could be a reasonable out of pocket cost place to retire.
My property taxes in NJ are significantly higher than any of the places I am looking to move to. Same priced house in these areas (desirable higher COL areas in lower or average COL states) have property taxes 50-75% less. This is a five figure savings. Savings are even bigger given that I can buy a comparable home for about 20% less.
Yeah maybe I wasn't clear enough. We'd save probably 75% in prop taxes on reasonable* similar size house, but also we'd gain much more than that by freeing up the capital tied up in our house; for us a similar size nice house in L/MCOL area would cost maybe 75% less also. Again, prop taxes in extremely expensive parts of Hudson County right across from Manhattan are similar to US avg in *% of market value* terms, but very high in $ terms because the market values are so high, meaning there's also a big opportunity cost to tying up that money in a house where you consume the owner imputed rent. And our savings from not paying NJ income tax in a no income tax state would also be more than the prop tax savings. Our total savings in L/MCOL area of no income tax state would be a multiple of the prop tax savings which alone would be at least $15k/yr. NJ is sky high cost where we are, in our situation. We like it here, but without local family connections we'd be long gone.

*basically no house in say FL, TN, NV or other no income tax state is literally like ours, 1901 brownstone, but ours is below average size for US so no problem finding a comparable sq ft, and it's more in the lifestyle category whether to live with the inferior construction quality of modern peak roof wood frame houses vs. paying a boatload in tax and opportunity costs to live in a work of art. :happy
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Sandi_k
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Re: Is it worth to relocate for retirement?

Post by Sandi_k »

vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k. That's because SC levies yearly property taxes on vehicles, boats, and the motors on those boats. We have a 2012 Tacoma and a 2019 Hyundai, taxes $831. We have modestly priced boats and motors. A 2020 20' pontoon with a 90 hp outboard cost $29,000, tax $1,503 (being appealed), a 2019 16' bass boat with a 50 hp outboard, cost $20,000, tax $451. The majority of these property taxes go for schools, which isn't exempted at any age, except for your primary residence over age 65.
You must not have owned boats in CA - because CA does assess personal property taxes on boats, jet skis, and airplanes. We just spent $400 on a jetski and a boat to our county tax assessor for the year.

Also, as noted - you must have bought your CA decades ago. We bought in the Bay Area in 1992, for $150k. Our property tax when we moved in 2011 was ~ $5k per year, even after Prop 13 limited increases. To have only $3k in property taxes, you must have purchased in the 1980s. So buying int he 1980's and relocating in the 2010's isn't comparable. We *did* relocate within CA in 2011, and our current rate (no Mello Roos or HOAs) is now $9k per year.

So SC is still a VERY good tax deal, apples to apples, with CA.
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LilyFleur
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Re: Is it worth to relocate for retirement?

Post by LilyFleur »

surfstar wrote: Thu Sep 17, 2020 12:18 am
Tingting1013 wrote: Wed Sep 16, 2020 8:30 pm
LilyFleur wrote: Wed Sep 16, 2020 7:39 pm
dang1 wrote: Sat Aug 22, 2020 4:16 pm All these mentions of what folks are paying in property tax has made me jealous! I pay $14k/year here in Calif and that is with the increases capped due to prop. 13. We've been in this house for ~20 years, but someone moving in now would pay even more. It was a bit more bearable before SALT went away, but now..uggh.
Wow, you must live in a huge house in a very pricey area.

I bought 9 years ago, live in a condo a mile and a half from the beach, in a VHCOL area, and pay $3600/year in property taxes, in California.
Where in CA could you find a beach-adjacent condo for $300k nine years ago?
Guessing Oceanside could have fit.
I know for sure that Port Hueneme would have been much less than $300k at that time. Just a few years ago even. Decent surfing beach, but otherwise I wouldn't want to live there unfortunately.
Not Oceanside.
NJdad6
Posts: 252
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Re: Is it worth to relocate for retirement?

Post by NJdad6 »

JackoC wrote: Thu Sep 17, 2020 4:58 pm
NJdad6 wrote: Thu Sep 17, 2020 10:05 am
JackoC wrote: Thu Sep 17, 2020 9:06 am
illumination wrote: Wed Sep 16, 2020 7:14 pm
chipperd wrote: Wed Sep 16, 2020 5:15 pm

Overall tax burden is the issue. According to different sources, here is where Mass is ranked nationally:

22nd (https://wallethub.com/edu/states-with-h ... den/20494/)
22nd (https://www.kiplinger.com/slideshow/tax ... index.html)
20th (https://worldpopulationreview.com/state ... n-by-state)
40th (https://money.cnn.com/pf/features/lists ... total.html)
Some of these rankings though are absurd, like Kiplinger saying California is #5 on the lowest taxed states. And Illinois and New Jersey is ranked "better" than Texas or Tennessee? That's absolutely laughable.

Much of this analysis is where you fall as an individual. I'm sure many stereotypical "high tax" states aren't so bad in certain income ranges. But some states really whack you when you are on the higher end.
Yes some of those rankings are obviously ridiculous for particular people. For example Wyoming on CNN list (based on 18 yr old information from the 'MA taxpayer's foundation' :| ) as third highest taxed...with no income tax: ridiculous in case of high income people where income taxes tend to dominate, especially given the tighter limit on deducting state income tax on federal tax since 2018, super-especially for people who 'qualify' for 'special' ~9%+ brackets certain states now have for very high income. And note the original poster said MA was punishing to people *in high income bracket*. That said, the various often contradictory, sometimes ridiculous 'rankings' do illustrate the pitfalls of broad brushing states without considering the individual situation.

Another big problem with those rankings, and it's appeared as issue already in the thread: you can't really separate property tax burden from real estate cost. Our property taxes as % of market value (in NJ) are right around the US national average. But the absolute number is eye watering because the market value is so high. And not because it's a big house, it's smaller than US national average size for single family homes. It would be pedantic to say our 'tax burden went up' if we moved to any of innumerable areas in the country where we could get a nice house same size for 25% as much just because we ended up paying say 30% as much property tax. And again that's besides all the capital we have tied up in the house a lot of the return of which we're consuming just by living here, 3/4's of it could instead be generating cash return we could spend on other things. We'd be multiple $10k's /yr financially better off in a moderate cost area in a no income tax state than where we are, and any 'ranking' which implies otherwise is wrong as it applies to us (whether we'll actually move given all considerations, financial and non, is another question). But again at the other extreme, NJ doesn't tax Social Security. And our city has seemingly reasonable subsidized senior housing, there's a county senior meal program, etc. If SS is your only income while benefiting from state/locally funded subsidies to get around real estate cost in particular, this could be a reasonable out of pocket cost place to retire.
My property taxes in NJ are significantly higher than any of the places I am looking to move to. Same priced house in these areas (desirable higher COL areas in lower or average COL states) have property taxes 50-75% less. This is a five figure savings. Savings are even bigger given that I can buy a comparable home for about 20% less.
Yeah maybe I wasn't clear enough. We'd save probably 75% in prop taxes on reasonable* similar size house, but also we'd gain much more than that by freeing up the capital tied up in our house; for us a similar size nice house in L/MCOL area would cost maybe 75% less also. Again, prop taxes in extremely expensive parts of Hudson County right across from Manhattan are similar to US avg in *% of market value* terms, but very high in $ terms because the market values are so high, meaning there's also a big opportunity cost to tying up that money in a house where you consume the owner imputed rent. And our savings from not paying NJ income tax in a no income tax state would also be more than the prop tax savings. Our total savings in L/MCOL area of no income tax state would be a multiple of the prop tax savings which alone would be at least $15k/yr. NJ is sky high cost where we are, in our situation. We like it here, but without local family connections we'd be long gone.

*basically no house in say FL, TN, NV or other no income tax state is literally like ours, 1901 brownstone, but ours is below average size for US so no problem finding a comparable sq ft, and it's more in the lifestyle category whether to live with the inferior construction quality of modern peak roof wood frame houses vs. paying a boatload in tax and opportunity costs to live in a work of art. :happy
Not disagreeing with anything you said. I was pointing out that I would have significant savings if I decided to relocate. Sounds like you would too. Whether one decides to is a different matter. Nothing wrong with “paying more” if you enjoy where you live. I believe the OP was asking strictly about the cost savings. Your house sounds very nice.
csm
Posts: 420
Joined: Sun Mar 27, 2016 7:52 am

Re: Is it worth to relocate for retirement?

Post by csm »

ncbill wrote: Wed Sep 16, 2020 1:26 pm
Most retirees would instead be downsizing...e.g. moving from a SFR to a 2-bedroom cottage/townhouse/condo often in a planned community like The Villages...no more yard work plus maintenance covered by a fixed monthly fee.
There are no townhouses or condos in The Villages ... and the fixed monthly fee there does not cover yard work.

We researched The Villages for my mother some years ago. All homes are stand-alone and each owner is responsible for their own yard/garden, although many hire it out.
vested1
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Re: Is it worth to relocate for retirement?

Post by vested1 »

Sandi_k wrote: Thu Sep 17, 2020 6:02 pm
vested1 wrote: Wed Sep 16, 2020 8:28 am We moved from CA to SC last year, and invariable when locals we have met say that we must be happy to be out of such a highly taxed State I usually just smile and don't disabuse them of that fantasy. I've been criticized on this forum for saying most total taxes are comparable in most areas, but from what I can tell in my limited experience, it's true, other than the obvious locations like New Jersey for high property taxes.

Our property tax in CA was about 3k a year. In SC it is almost 5k. That's because SC levies yearly property taxes on vehicles, boats, and the motors on those boats. We have a 2012 Tacoma and a 2019 Hyundai, taxes $831. We have modestly priced boats and motors. A 2020 20' pontoon with a 90 hp outboard cost $29,000, tax $1,503 (being appealed), a 2019 16' bass boat with a 50 hp outboard, cost $20,000, tax $451. The majority of these property taxes go for schools, which isn't exempted at any age, except for your primary residence over age 65.
You must not have owned boats in CA - because CA does assess personal property taxes on boats, jet skis, and airplanes. We just spent $400 on a jetski and a boat to our county tax assessor for the year.

Also, as noted - you must have bought your CA decades ago. We bought in the Bay Area in 1992, for $150k. Our property tax when we moved in 2011 was ~ $5k per year, even after Prop 13 limited increases. To have only $3k in property taxes, you must have purchased in the 1980s. So buying int he 1980's and relocating in the 2010's isn't comparable. We *did* relocate within CA in 2011, and our current rate (no Mello Roos or HOAs) is now $9k per year.

So SC is still a VERY good tax deal, apples to apples, with CA.
We bought our home in CA in 1994 and sold it in 2019, owning it for 25 years. We purchased it for 185k. You must have missed the part of my comment that said all counties have different rates for property taxes. You lived in the Bay Area, which has higher property taxes than the county in which we lived. Your new higher payment of property taxes is based on the purchase price of the house you moved to in CA, because prop 13 says you start over based on the sales price. But I'm sure you know that even though you didn't mention it. And yes our property tax increase over the years was much less than yours was because we didn't live in the Bay Area.

Your statement that SC taxation compared to CA is apples to apples is incorrect, but only incorrect in that taxation is far less in SC than in CA for retirees overall. I would say that it's somewhat less, but not significantly. I didn't pay property tax on my boats, their motors, or my vehicles in CA. I just looked at my detailed bill for vehicle registration in CA and there is no identification of property tax. The largest portion is "License Fee" which I suppose could be construed as property tax. You would know the differences if you had lived in both States, because you would have been subject to taxes in both locations.

My January registration for 2019 in CA (purchase date) when our Hyundai was new was $438, which included a $10 county tax. When I registered the same car in October of 2019 in SC, after paying a one time $265 bill for an out of State vehicle, and $616 for property tax for that vehicle, I was able to get my license and register the car with additional fees.

As for not owning boats in CA, that was an incorrect assumption as well. We owned 2 kayaks and a canoe and never paid taxes on them, and still don't in SC. We also had a 12' aluminum boat with a 25 hp outboard that was never taxed that we owned for a short time. You're right about other boats being subject to property tax in CA, which I was honestly unaware of, but they are only subject to tax if they are registered, and the law says that any boat that is only powered by an oar or by rowing doesn't need to be registered.

So, the only boat that I currently own in SC that would have property tax due in CA would be the 20' pontoon boat, and the motor wouldn''t be subject to tax as it is in SC. And now the salient points; The property tax rate in CA is 10% the year you purchase the boat, but the sales tax where I lived in CA would be an additional 8.75%. In SC the sales tax is capped at $500, and there is no property tax due in the year you purchase the boat unless you bought it exactly on January 1st. In CA the property tax on boats that are subject to it is 1% per year. In SC the property tax rate for boats and the motors on those boats is 10.5%, every year.

The tax statement is broken down into categories, with discounts and other assessments added or subtracted. The school tax exemption doesn't apply for boats and motors, only to homes if you qualify as being over 65 and having been a resident the requisite amount of time. The school tax portion on the pontoon boat and motor is based on the assessed value and was $1,064 of the $1,503 property tax bill in our case. The 10.5% is the basis on which every portion of the bill is based upon.

Honestly, I was just trying to answer the OP's question in (too much) detail, and since you are apparently not planning on moving from CA to SC, I don't understand why this would be of any interest to you.
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Sandi_k
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Re: Is it worth to relocate for retirement?

Post by Sandi_k »

vested1 wrote: Fri Sep 18, 2020 7:23 am
Honestly, I was just trying to answer the OP's question in (too much) detail, and since you are apparently not planning on moving from CA to SC, I don't understand why this would be of any interest to you.
I was trying to point out the areas in which your comments were incomplete or incorrect as well. It's a conversation, with differing experiences and knowledge, as noted by the boats with motors distinction.
Valuethinker
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Re: Is it worth to relocate for retirement?

Post by Valuethinker »

If you need to free up housing capital or move yo a lower tax bracket part of the USA to enjoy retirement more that's s clear.

What matters is:

- activities you want to do
- where your friends are or w you could make friends eg via church
- access to medical care especially over 70
- access to family especially grandchildren & proximity to children as you get older
- weather given savagery of winters in NE and Midwest USA or fetid nature of climate in some other areas (why I think Mid Atlantic USA is probably not a bad compromise although don't quote me on that in mid July)

You cut your cloth to these winds.

As you get older your medical care and family proximity needs will probably increase.

Let me tell you about the problems of being even 300 miles from parents in the middle of a pandemic lockdown.

Housing and taxes are 2nd order factors on this.

If you need a 3000 square foot house for some reason you are probably not living in NYC or coastal California. Unless you are very affluent.

On the other hand living in Manhattan (ex Covid-19) or on a beach in California are probably my idea of heaven so my square footage is going to be necessarily small. Like a large bedroom closet ;-).
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