Author Topic: Move states?  (Read 1037 times)

Murse

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Move states?
« on: October 10, 2020, 09:36:15 AM »
Hello everyone,

My wife is pregnant and we are planning to buy a house soon (3 months-1 year.) Oregon states tax rate is 9% on income, including investment income. We are planning on me switching to part time work relatively soon (1-2 years) and her not working at all. Although, I might not end up switching to part time because my income is larger than anticipated, I might just want to step on the accelerator to get to FI faster.

We were considering moving to Washington state which is a sales tax only state. Reasons are 1) slightly better value housing, 2) shorter commute for me to work, 3) no income tax on investment income 4) better school districts

The downfall would be that I would be further from friends and family (30 minutes vs 5-15.) Currently we only see them around once a week but might want to see them more when working less with the new baby.

If I end up working part time then I will have less total tax liability anyways but will still be paying 9% on investment income (currently guesstimate the income around 5-10k but hope for it to increase.)

Also if we were to move to Washington, I have over 100k in a 457 account at my current job so if I were to change jobs I could access this money without paying the state tax on it.

Thoughts?

lhamo

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Re: Move states?
« Reply #1 on: October 10, 2020, 11:40:12 AM »
Congratulations on your pregnancy,

You don't have to worry about schools for another 4-5 years.

Personally I would wait until after the kid is born to buy anything.  If you are really desperate to move to a bigger/different place, rent across the river for a year or so and see how it works for you in terms of your commute, how much you want to work, and seeing your family.  If you don't like it then you can buy back in Portland.  If you do like it, or aspects of it, you will be making a more informed decision about buying in WA -- you will have more time to look at different neighborhoods and decide where you want to target your search based on your actual life patterns/habits rather than what you think your life might be like.  Also if you decide to take a break from work you could cash out all or part of that 457 and not take the OR investment tax hit on it, and then move back to OR in later years.

She doesn't post much here anymore but @Bracken_Joy recently made a similar move and may have useful advice.

Malcat

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Re: Move states?
« Reply #2 on: October 10, 2020, 11:52:21 AM »
Congrats!

I don't have a lot to offer, but I am following with curiosity since there is a non-zero chance of me living in Washington state in a few years.

terran

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Re: Move states?
« Reply #3 on: October 10, 2020, 12:56:08 PM »
With your current situation it seems like a no brainer: closer to work which you go to probably 5 days per week, further from friends/family who you only visit 1 day per week, lower expenses (taxes), better housing options, better schools. But since you think your lifestyle might change, perhaps you should continue working until that happens and see how the "math" changes. Then you can make the decision based on what your lifestyle actually ends up being after the kid and whatever you decide to do about your job rather than what you think that lifestyle will look like now.

seemsright

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Re: Move states?
« Reply #4 on: October 10, 2020, 01:19:57 PM »
I live in OR. The only thing you need to keep in mind is the WA taxes on the things you bring. So you will have to pay taxes on your car and other items (make sure you understand this as the time is a determining factor) And make sure you understand how working in OR and living in WA works and how to file taxes. The other thing that I saw (that I do not pretend to fully understand) is the taxes on personal property yearly here is the link I found.

https://www.bellinghamherald.com/latest-news/article240430901.html?

From the research hubby and I have done is that each state has taxes and the details are different per state and it all equals about the same.

lhamo

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Re: Move states?
« Reply #5 on: October 10, 2020, 03:48:02 PM »
I live in OR. The only thing you need to keep in mind is the WA taxes on the things you bring. So you will have to pay taxes on your car and other items (make sure you understand this as the time is a determining factor) And make sure you understand how working in OR and living in WA works and how to file taxes. The other thing that I saw (that I do not pretend to fully understand) is the taxes on personal property yearly here is the link I found.

https://www.bellinghamherald.com/latest-news/article240430901.html?

From the research hubby and I have done is that each state has taxes and the details are different per state and it all equals about the same.

Unless you are planning to operate a farm or business, people moving to Washington state generally don't have to worry about this -- I have lived (or had my official US residence) in Washington state most of my life and never had to pay anything but sales taxes and property taxes (for real estate). The pdf on the dept of revenue site says:

"Personal property includes machinery, equipment, furniture, and supplies of businesses and farmers. It also includes any improvements made to land leased from the government (leasehold improvements)."

Paul der Krake

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Re: Move states?
« Reply #6 on: October 10, 2020, 04:03:31 PM »
I live in OR. The only thing you need to keep in mind is the WA taxes on the things you bring. So you will have to pay taxes on your car and other items (make sure you understand this as the time is a determining factor) And make sure you understand how working in OR and living in WA works and how to file taxes. The other thing that I saw (that I do not pretend to fully understand) is the taxes on personal property yearly here is the link I found.

https://www.bellinghamherald.com/latest-news/article240430901.html?

From the research hubby and I have done is that each state has taxes and the details are different per state and it all equals about the same.

Unless you are planning to operate a farm or business, people moving to Washington state generally don't have to worry about this -- I have lived (or had my official US residence) in Washington state most of my life and never had to pay anything but sales taxes and property taxes (for real estate). The pdf on the dept of revenue site says:

"Personal property includes machinery, equipment, furniture, and supplies of businesses and farmers. It also includes any improvements made to land leased from the government (leasehold improvements)."
The first part of their post is referring to use tax, which is separate but conceptually linked. If you bring in a car from out of state, Washington didn't get to apply sales tax to that car when it was purchased, so they apply use tax instead. It is typically assessed as a one time thing when you title and register the car in Washington.

That being said, I agree that it's not worth worrying about. It is linked to the car value, so unless you drive a six figure sports car, it won't matter much in the grand scheme of things. If you make any sort of decent money and live even a slightly frugal lifestyle, the other tax savings from moving away from Oregon will dwarf it.

When we registered our car in 2016 in Seattle it was a couple hundred bucks more (maybe $300 or 400?) than the subsequent yearly fees. This was for a car worth maybe $8,000 at the time.

I still find it hilarious how riled up some Washingtonians get about the taxes and fees related to operating a car, yet want traffic to magically go away.

Buffaloski Boris

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Re: Move states?
« Reply #7 on: October 11, 2020, 02:38:01 PM »
I have a different take on this.  Much as I detest state income taxes, you should ask: which is likely to result in the lowest over all tax bill?  A state with no income tax given a lower overall income and a high sales tax, or high income tax and no sales tax?

Personally, if it were me, I'd rent in the other state before committing to a home purchase. 

Bracken_Joy

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Re: Move states?
« Reply #8 on: October 24, 2020, 09:43:49 AM »
Hello everyone,

My wife is pregnant and we are planning to buy a house soon (3 months-1 year.) Oregon states tax rate is 9% on income, including investment income. We are planning on me switching to part time work relatively soon (1-2 years) and her not working at all. Although, I might not end up switching to part time because my income is larger than anticipated, I might just want to step on the accelerator to get to FI faster.

We were considering moving to Washington state which is a sales tax only state. Reasons are 1) slightly better value housing, 2) shorter commute for me to work, 3) no income tax on investment income 4) better school districts

The downfall would be that I would be further from friends and family (30 minutes vs 5-15.) Currently we only see them around once a week but might want to see them more when working less with the new baby.

If I end up working part time then I will have less total tax liability anyways but will still be paying 9% on investment income (currently guesstimate the income around 5-10k but hope for it to increase.)

Also if we were to move to Washington, I have over 100k in a 457 account at my current job so if I were to change jobs I could access this money without paying the state tax on it.

Thoughts?

Oh hey Murse! I remember you. Came for the batsignal. @lhamo is correct, we recently made this very same choice. Feel free to PM and I'll give you neighborhood specifics behind our choice. A lot of nurses and docs that work in Portland live here, so I think a lot of people have made very similar choices ;) Definitely pros and cons though! But for us, with baby, during pandemic, with work considerations, and taxes (we earn way more than we spend, so no income yes sales tax makes TON of sense for us, esp since food isn't taxed and we buy a ton of our baby stuff used through marketplace so no tax there). Anywho, feel free to reach out!

ejmyrow

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Re: Move states?
« Reply #9 on: October 25, 2020, 08:53:05 PM »
We have a nearly 8 month old baby, our first kiddo. My thought is that friends and family are extremely valuable. If I moved to a new place and didn't know anyone and had a baby that would be really lonely. It's a LOT of work. I started a mom's group and that is a total lifesaver. If your wife is really social and makes friends easily and takes leadership in socializing, it could work... in that case maybe find a really great doula or midwife who creates groups for parents.

So, not so much about the numbers but friends/family are priceless...