r2i forum

This is more a where to live in US dilemma. If one is sitting on capital gains of 750000 dollars and is in a state (CA) with close to 10% state tax. Is it worth moving to a state such as TX, or FL that has no state tax to save on the amount given to local state ? The comparative general differences of staying in these two areas are kind of well known. At a personal level, the two match up in terms of possible social life , friends/family members in the two locations.

Thanks for your thoughts.

All depends on the hassles involved. Do you have 2 kids, whose education and uprooting would need to be considered? Do you have a working spouse, whose job would need to be considered? Do you have strong family/friend ties in CA, which you would need to rebuild in FL/TX? Do you have a 4 BR house full of 15 years of stuff, that would need to be moved...

Considering all the above, would probably present a better picture, as opposed to a plain monetary calculation. In a black-box, YES, I would move to save 75K. In reality, the decision is a bit more complex. It might also help in getting better ideas if you can disclose the asset which has given you such gains. Is it real estate in India, stocks, house in ca...

Also, don't forget future gains. Are you an entrepreneur, who might benefit tremendously by living in Silicon Valley? Moving out for the sake of 75K may then seem not such a great idea. You can't put a monetary value on such things. Also, what percentage of your total portfolio, is this 75K? Are you a multi-millionaire, or is 750K your life's savings?

thx Sid,

yes , i agree that this is not just a monetary question and this is precisely the motivation for asking .

Have kids in middle school and they are open to it. Wie works and she is open as well. Both of us hope to keep our respective jobs but this is far from being a given. The worst case is both will need to figure out something new to do. Not a multi millionaire but do have enough in reserves besides this amount. Moving house and buying something in the new place will offset each other monetarily and is also acceptable emotionally.

One key question bothering us is , is Bay Area a better place for a Desi kid (girls) to grow up or say TX. We are trying to see it from a now and a future perspective. Also, from the POV of prospects of thier own future - college,career , social life, marriage, etc.

Basically, if these are kind of equivalent, why not move and start planning for our own retirement ?

We moved from the Bay Area (CA) to Washington DC. I would never do it again. CA is so much better than any other place in the US. The East and TX have awful weather. We never had to worry about not being able to sleep because of 70 mile winds howling over our house for days or worrying about a tornado watch in California. Add to this the brutal winters (can't go out for a walk from Dec to March), shoveling snow, thunderstorms with related damage and picking up truck loads of leaves in the Autumn. In addition, people are much more red neck, "USA is the best, let's bomb here and there", compared to CA. CA is much more diverse, the food is much better and you can enjoy your life. You don't have to be worrying if your home is ok after every severe storm. Florida has nice weather but you have the hurricane, lightning and thunderstorm issues which you don't face in the Bay Area. Still, those states are cheaper and if you can get a cheap home while keeping good jobs, you would be able to save more. Just remember to get a solid home without any large trees around. Lastly, couldn't one of you become a technical resident of FL if this is a one time thing? Live there for the time needed to be a tax resident that year?

There are few problems with Bay Area:
- chances of a major earthquake that can leave a big crack in your house. You may have to demolish and rebuild. No insurance coverage for natural calamities. Remember the last major quake was in 1989 and Bay Bridge collapsed during that time.
- high competition to get into good colleges which are few in numbers. Too many Chinese and Indians and both communities are hyper competitive. There was one thread which went into details and the conclusion was East Coast is better for kid's college education.
- no point for single income family to live here. They will be better off in EC/TX/FL or even India. I am excluding lucky dudes who have big stock options.
- quality of public schools are not good except for few pockets.

Now coming to what is good : there are some fun loving and cool R2IClub members who live in this area :)

Now to main subject: You may lose in terms of income if you move to TX or FL. Compare the income loss with 10% capital gains tax.

You did not say how will you achieve such a capital gain. If it is due to stock options awarded while working in CA, beware! Chances are that Franchise Tax Board will not let you go so easily without paying tax.

samv,

the plan was to establish residency outside of CA before selling. Its a combination of stock options and gains in the market. I am obviously hoping that the gains will hold until execution though I believe it is likely to go up slightly.

Also, I would like to add that both wife and I have lived in TX and FL in the past and ar familiar with the weather patterns. Bay Area does offer unbeatable climate and cultural fit but I am skeptical abiut CA in the long term being in the same position economically or technolgically. Also, I am wondering if my kids are living in an asian coccoon away from the rest of the country and if this is good for them if they are going to live here.

thx for all the comments so far..

Austin - Yes. Lower taxes and a large house for 50% less would be a huge positive.

It's a question of work and social/family circle (And any house to sell). It appears that you've moved around. So that helps..

On second thought, OP should stay back in CA. The state govt has budget problem and can use his tax money. Please don't leave.

Old-Spice2;372755On second thought, OP should stay back in CA. The state govt has budget problem and can use his tax money. Please don't leave.

:-)

Just read about Gov Brown's tax package planned for June ballot. I will not be surprised if his plan to extend the surcharge on state tax, sales tax, car tax, etc becomes a permanent fixture. Its a pity what mess CA is in. I do not see how else they can get out of it and if even this will help