Will and I moved to Las Vegas last week.
When I say this, people often respond in three main ways:
- Confused look. “People live there?”
- Cue the casino jokes.
- Start booking their ticket.
After the initial startle, people ask: “Why Vegas?”
It’s tough to give a soundbite answer. Most people move because of job or family. How can you explain why anyone would move anywhere for other reasons?
Here’s my best attempt:
We moved here for the lifestyle. Not the gambling, obviously — but the canyons, mountains, desert, sunshine, hiking, climbing, camping, music, festivals, food and entertainment.
I love the outdoors, especially the mountains. (I was born in Nepal; mountains are in my blood.) I lived in Colorado for 8 years and loved it, but I’m sick of winter. (You’ve seen how people in Atlanta react to snow.) I prefer cities; I like the West Coast; I’ve always wanted to live amidst palm trees.
Vegas also features — dare I say it? — low taxes, low cost of living, and the opportunity to be in both a city and state that’s rapidly expanding. Tesla is bringing 6,500 jobs to Nevada (near Reno); Zappos founder Tony Hsieh is spearheading a $350 million renovation of downtown Vegas (with varying results, but overall a solid trend). Nevada is the 7th fastest-growing state in the nation, according to US Census data from April 2010 to July 2014.
It’s an affordable, growing spot bursting with potential. Equally as important, it’s a sunny, warm, mountainous landscape that’s ideal for an outdoor, active, social lifestyle.
(See? That’s a much more long-winded soundbite than simply saying: “um, I moved here to work at CNN.”)
“Because I Can.”
If you’re a longtime Afford Anything reader, you might remember that last year I spent roughly one-third of the year immersing myself in various U.S. cities — including NYC, Austin (twice), San Diego (three times), and Las Vegas (twice, including a one-month stint here in January).
I did that for two reasons:
- Shopping for a place to live. (San Diego and Austin were strong contenders).
- Test driving the premise that my Atlanta real estate investments could operate without me. (MUCH more on that topic in this article.)
Atlanta is a great city, on the brink of becoming amazing, thanks to increasing urban density and development of pedestrian/bike paths. But after five years there, I wanted a new adventure. And to be honest, as much as I love Atlanta (and I’ll miss it), it’s not me. I like the West.
Plus, I can work anywhere with Internet. So why not? #LocationIndependence
The Last Five Years
Five years ago — when I was 26 — Will and I moved to Atlanta with one small backpack per person. We had no assets, no income, and unimpressive savings. No computer. No car. No blender or forks or pots-and-pans. We had just returned from long-term vagabonding, and started from scratch.
We hustled hard. We ate lots of spaghetti (it’s cheap!), scrutinized every dime, and rented a cramped apartment at $200 per month, per person. (Five roommates shared this space, all random people from Craigslist who, fortunately, turned out to be awesome.)
I used the last of my savings to buy a laptop. I started freelance writing, earning $15 per article. Those were lean, scrappy days.
Fast-forward five years.
Today, we’re leaving Atlanta with more than $1 million in real estate investments and a six-figure online business. We bought five houses in five years, two of which we own free-and-clear. We clear more in annual net passive income than I used to earn at my former 9-to-5 job.
I’m sharing this to illustrate that if we can make this leap — and we have no special talent, skills or connections — I genuinely believe that you can, too, if that’s what you want.
It’s been a long, crazy journey. I’m grateful that I had the support of you, the Afford Anything community — especially the readers who kept encouraging me back when I was buying my first investment property and having minor panic attacks over whether or not this goofyheaded idea could work.
As it turns out, it worked. It worked spectacularly.
Thank you.
Living in a State with No Income Tax
Since this is a finance blog, I owe it to you to elaborate on the ridiculous benefit of living in a state with zero income tax.
(To be clear, that’s not the reason that we moved to Nevada. But this is a finance website, so I’d be irrelevant for me to start gushing about sand dunes and canyons and the myriad of other cool things here.)
Before I launch into this, one disclaimer:
Don’t Wag the Dog
Don’t let the tail wag the dog. Figure out what you want most in life, then find ways to live your dream while earning passive income / minimizing costs.
I once received an email from a reader in a great financial position: no debt, strong retirement funds, nice emergency fund. He asked: “I’d love to backpack South America, but I can’t stop thinking about how that same money, invested at 8 percent, would grow with compounding interest over 40 years …”
I slapped myself on the forehead. (Figuratively.) And then I cried for humanity. (Also figuratively.)
That reader had forgotten the bigger picture. Money is a tool that you use to build your life; nothing more. Money is merely the ‘how.’
Don’t design your life based around pinching pennies or minimizing taxes. Yes, you might devote a few years to hardcore hustling, as I described above, but that’s only temporary. If you hold some incredible passion, like traveling across Ireland or opening an herbal tea shop or sailing the Caribbean, create a kick-butt financial plan — and then dive in headfirst.
If lifestyle you crave carries some extra costs, taxes or fees — don’t hesitate. Life is too short, too beautiful, and too precious to base every waking moment around saving money or maximizing tax strategy.
(Somewhere, a bunch of CPAs are cringing.)
We wanted to live out West. We didn’t have a specific place in mind, we just wanted to be in a spot that’s outdoorsy, and also a big city. Those wants are the “dog,” minimizing taxes (and cost-of-living) is the “tail.”
With that said, let’s dive in:
Seven States with No Income Tax
Seven U.S. states have zero income tax: Nevada, Florida, Texas, Washington, South Dakota, Wyoming and Alaska. Two more states, Tennessee and New Hampshire, have no taxes on ordinary income, but do assess taxes on dividends and investment income.
By contrast, California has a top marginal state income tax rate of 13.3 percent.
“Yeah, but that only applies to millionaires.”
Okay, let’s look at the average American. For simplicity’s sake, we’ll assume this person is single or married filing separately; the words ‘earning’ or ‘income’ below refers to taxable ordinary income after exemptions and deductions.
- In New York City, a person earning $51,000 annually pays an effective rate of 9.3 percent, or a total of $4,704 per year (which breaks down as $2,961 to the state and $1,743 to the city).
- In California, a person earning $51,000 annually pays 9.3 percent state income tax (marginal rate).
- In Oregon, a person earning $51,000 annually pays 9 percent state income tax (marginal).
- In Hawaii, a person earning $51,000 annually pays 8.25 percent state income tax (marginal).
- In Iowa, a person earning $51,000 annually pays 7.9 percent state income tax (marginal).
Minnesota, 7.05 percent. Vermont, 6.8 percent. Washington D.C., 8.5 percent. And my former home state, Georgia, has a 6 percent income tax that’s almost-flat (it applies to all income above $7,000), putting it near the national median.
“That’s only 6 percent; what’s the big deal?”
- The average American saves less than 6 percent of his/her income. Ouch. Getting rid of a 6 percent expense means that most Americans can more than double their current savings rate.
- Boosting your savings by six percent achieves half of the One Percent Challenge in one fell swoop.
Deduct My Sales Taxes? Yes, Please!
It doesn’t stop there. The benefits keep piling on.
If you itemize deductions, the IRS gives you a choice:
- Deduct your state and local income tax, or
- Deduct your state and local sales tax
You’re free to choose one or the other; just not both.
Most people deduct their state income tax, which is usually higher. But if you live in state without income tax, you can have your cake and eat it too. Not only do you enjoy state income tax savings, you also write off your sales taxes. Double-win!
What if you don’t want to track your sales tax payments? No problem. The IRS offers a tool that estimates your sales tax based on your location and income. They refer to this as “the easy route” — with an exclamation point. (This is serious, y’all. I’ve never seen an exclamation point on the IRS website before.)
Just plug in your numbers, and the IRS tells you how much to write-off. It’s easy and audit-proof, my favorite combination.
How High Are Sales/Property Taxes?
But it can’t be all roses and champagne, right? One of the biggest criticisms of tax-free states is the allegation that these states raise sales and property taxes to compensate.
In some cases, this is valid: property taxes in New Hampshire are among the highest in the nation. (That said, New Hampshire has no sales tax and no income tax, keeping the overall tax rate low.)
In other cases, however, both sales and property taxes are consistent with the amount you’d pay in an income-taxing state.
Let’s look at Atlanta vs. Las Vegas for example.
- In the City of Atlanta, sales tax comes to 8.0 percent.
- In the City of Las Vegas, sales tax comes to 8.1 percent.
The difference is 0.1 percent — hardly worth screaming about. (If you live in one of the five states with no sales tax — Alaska, New Hampshire, Oregon, Montana and Delaware — you’ll want to crunch the numbers more closely.)
Perhaps more poignantly: sales tax “penalizes” spending. Income tax “penalizes” earning. If you — ahem — earn more than you spend (can I say that with any more emphasis?), you’re better off trading one for the other.
What about property taxes? These rates vary wildly by county, and there’s no evidence that property taxes are higher in zero-income-tax states (NH excluded). In Nevada, they’re substantially lower than the national average.
Back to the Georgia vs. Nevada example:
- In Georgia, effective property tax rates range from 0.50 percent to 1.35 percent, and the statewide average is 0.94 percent.
- In Nevada, effective property tax rates range from 0.46 percent to 1.08 percent, and the statewide average is 0.96 percent.
The difference is 0.02 percent (statewide average) — and, I should add, the property tax rates Clark County (Las Vegas) are lower than tax rates in Fulton County (Atlanta).
One other crucial point: The more house you buy, the higher your property taxes. You can control this arena. The easiest way to trim this tax bill is by purchasing an affordable home.
“You’ve thrown a lot of numbers at me, Paula. What are you saying?”
- Not paying state income tax is awesome.
- Don’t assume that property and sales tax will (necessarily) be higher in a zero-income-tax state.
If you’re thinking about moving, compare your current taxes to your new load. In my case:
- Income tax is zero
- Property tax is lower
- Sales tax is the same (but its deductible, so its effectively lower.)
Verdict: Triple win!!
“How does the State of Nevada make its money?”
Hotels and alcohol, among other things. Nevada has the highest alcohol tax in the nation. Viva las Vegas!
Why Should I Care?
How important is tax reduction, anyway? How big of a difference can it make?
Let’s say that through a combination of all of the above (income/sales/property/federal deductions), you save an effective 10 percent on your taxes.
- If you (+ your spouse) earn* a combined $50,000, you save $5,000 per year. That’s most of your IRA contribution.
- If you (+ your spouse) earn $100,000, you save $10,000 per year. That’s a car. That’s a flippin’ CAR. Every. Year.
- If you (+ your spouse) earn $250,000, that’s an insane $25,000 per year. Dude, that’s someone’s salary.
(*Refers to taxable earnings.)
We felt this impact with Will’s latest paycheck.
I’m self-employed, which means I don’t see results until Tax Day. Will is a (location-independent) employee, which means taxes are skimmed from his paychecks – and his latest check was several hundred dollars bigger than usual.
I didn’t connect the dots when I saw the deposit. It took me a moment to understand why.
“Did you get a raise?” I asked.
“Yeah,” he replied. “It’s called moving to Vegas.”
Life First, Then Money
Again, I’ll repeat my disclaimer: Don’t let the tail wag the dog. Make choices based on the life you want –and then optimize this for ALL costs, not just taxes. Dog, then tail.
If your wildest dream is to live in New York or L.A. or San Fran, go live there, taxes be damned. It’s your time. Live your epic adventure.
But if you’re moving to Lake Tahoe and you’re like, “hmmm, which side of the state border should I live on?,” maybe it’s time for a different conversation.
How Does This Apply to Me?
I’m sure some readers are going to say: “Gee, that’s all well-and-good that you could move to a state without income tax, Paula. But what about those of us who have desk jobs? How is this information supposed to benefit us?”
- Learn the landscape. If you want to be educated about finance, learn the whole picture. I’ve learned plenty of information about 401k withdrawals, annuities and options trading, even though I’ll either never use this info (options, annuities), or won’t use it for decades (401k withdrawal strategies.) It’s part of a well-rounded financial education.
- Percolate on the idea. Taking a step back: what’s the benefit of education, anyway? One perk is that minimizing taxes will live in the back of your mind. When decision-making time strikes, you’ll remember to factor in taxes. For example, when your boss calls and says, “hey, I’d like to cut your salary in exchange for more stock options” — you can ask (among other things), “what are the tax consequences?,” because you’re the guy/gal in the office who thinks about those kinds of things. It’s kinda like learning about dollar-exchange rates, inflation, and lots of other invisible economic forces that affect your day-to-day life without you necessarily being conscious of its impact.
- Future application. You probably won’t work in your current job forever. When you’re contemplating offers, keep this information in mind (again, without letting the tail wag the dog).
“What About Your Properties?”
Two of the most common questions I hear (after “How long can I crash on your couch?”) are the inevitable: “Are you going to invest in real estate in Vegas?” and “Are you going to sell your properties in Atlanta?”
To the first question: *Shrug.* I don’t know. I’m not going to rush into any decisions. I’ll live here for awhile and understand the landscape.
To the second question: HECK NO! If you know me at all, I hope you’ve noticed how much I emphasize three words: passive, passive, passive. The fact that I’m getting this question so often tells me that I’ve done a piss-poor job of showing you how hands-off this real estate enterprise is. For that, I apologize. Clearly I need to step up my game, and reveal behind-the-scenes in stronger detail.
This article is now 2,849 words — and I prefer not to exceed 2,500 — so I’ll refrain from launching into this right now. Stay tuned for the sequel, in which I’ll describe (in painfully specific detail) just how I run my real estate business in less than 30 minutes per month per unit. (That’s less than 3 hours per month. Sometimes MUCH less.)
(This figure excludes The Airbnb Experiment, which is an utterly different animal. I’ll share details of this in the 5th and final (!!) installation of the Airbnb series.)
If you’re still asking, ‘How can you leave a bunch of properties on the other side of the country?’ — I’ll answer this in the next article, but for now, I’ll leave you with the short answer:
- I hustled hard for the first few years, so that I could kick back and enjoy a hands-off business in the future. (That future is now.)
- I shifted from a DIY mentality (which I used to carry in spades) to a build-an-awesome-team-and-create-killer-systems mindset. (My team is awesome. The properties are in proven, trusted hands. My systems are pretty darn good, too.)
- I accepted that I could either maximize ‘profit’ by handling everything myself, or I could create a passive business that brings me more freedom, but not both. (Money vs. time: I could afford anything, but not everything.) I prioritized passive.
- I understood that passive is not ‘free money;’ I had to invest the hours upfront.
- I built mega-cash-reserves.
- I made “small bets” — stepping away from my real estate business for a few weeks, then a few months, then (finally) 1/3 of the year — to test-drive the experiment and make changes accordingly.
That’s the short answer. Details coming in the next post.
(P.S. Check out the awesome on Instagram)
Financial Velociraptor
Congratulations on the move. Vegas is hot but much drier heat than ‘Hotlanta’. I think about moving a lot but don’t look seriously because I have family nearby. The FIRE life is good and Texas has no state income tax and COL is low in Houston.
You still haven’t persuaded me to try real estate investing (it seems like too much work?) but maybe your upcoming post about focusing on the passive will change my mind.
Jesse Crookes
Moving to Vegas is big move…. all the best and good luck
The las vegas movers team 🙂
RentalRandy
WOW! Just, WOW!
Congratulations, Paula. Keep living the dream, woman. You’re a friggin’ force for awesome sauce.
Paula Pant
Thank you Randy! 🙂
Elenor
I had to chuckle at this:
“If you know me at all, I hope you’ve noticed how much I emphasize three words: passive, passive, passive. The fact that I’m getting this question so often tells me that I’ve done a piss-poor job of showing you how hands-off this real estate enterprise is. For that, I apologize. Clearly I need to step up my game, and reveal behind-the-scenes in stronger detail.
Back when I taught tai chi, I used to tell my classes: yes, I DO say: “‘shoulders down’ a million times every class” (an exaggeration, but it didn’t feel like one! {wink}; heck, I could even hear myself saying it in my sleep!). However, I would explain to them: “you will not HEAR it until the 21st time I say it, which means I have to have said it 20 times before that!” (They laughed, but it was true!) It’s NOT that you’re not saying the above enough — it’s that they can’t “hear” it until you’ve “laid down” (and usually paved, sidewalked,. and planted groundcover along) the neural roadway to get it mounted in their brains….
(Try to) Enjoy saying it a million times — you’re going to have to anyway! The joy in teaching is when … “suddenly” … they get it! ” Suddenly their eyes (and brains) open wide — and they shout: “OMG! This changes EVERYthing!! WHY didn’t you TELL me that before?!?!” SO, celebrate with them — and know that first “20” times were invisible (er… un-hearable?) but necessary!
Thanks for all the good info. I’ve put a “move-date” (from Cumming, Georgia in fact!) (back out) to WA or ORE (TBD) of 2020 — because “a plan without a date is just a wish.” (My husband died suddenly in 2011; I am still in survival-mode getting his manufacturing biz back up to full speed/operation. I threw a “round-number” date on my plan because I need the economy/housing prices to recover, the biz to get solidly recovered (I was a kept-wife: there were lots of things I didn’t even know how to do!), and build up a cushion for myself and the biz to make the move. I have paid off the $52,000 in CC debt my beloved husband left me in (he SO wasn’t supposed to die at only age 60!!) YAY me, but I’m still building a safety net around myself and this biz.
I’d suggest y’all’s readers might look closely, too, at plans for the loss of a spouse! I wasn’t on the house or the car or the motorcycle (couldn’t SELL the danged thing until I owned, it, eh?). (Why would we — he was going to get it all fixed up before he got old… (60 s NOT old! {sigh})
Jesse Crookes
Thank you!
Kevin
(Somewhere, a bunch of CPAs are cringing.)
Not this CPA, he was nodding along as you proclaimed money the “HOW” not the “WHY”. Good for you.
Don’t let the tax tail wag the finance dog is a line I often use with clients!
Paula Pant
LOL — Awesome, Kevin! Good for you — I’m glad you get it! *High-five*
My CPA in Atlanta gets it too. (In fact, we had drinks together recently and he told me that he just became an Airbnb host himself!)
Fervent Finance
Congrats on the move Paula! As an accountant, taxes are something I think about a lot (I know soooo exciting). I currently live in NYC where my effective tax rate is quite high, but at the same time my move here as allowed me to save more money as I spend so much less on transportation and have been able to increase my income. I look forward to seeing what plans you have for Las Vegas!
Paula Pant
@FF — I love, love, love NYC. I’ve seriously contemplated moving there on many occasions (and if I weren’t such a weiner about cold weather, I’d probably be there now.) The many advantages of living in New York (including income-boosting, networking, and just enjoying one of the best cities in the US) totally make the tax rate worth it, in my opinion. 🙂
Barbara Winter
Bravo! I moved to Las Vegas in early 2006. Like you, I was repeatedly asked, “Why Las Vegas?” The answer was a bit complicated, but I had discovered (after years of avoiding the place) that it oozes entrepreneurial spirit.
I absolutely loved everything about living there–including the great library system and easy airport access. I wish you a wonderful relocation.
Alas, I no longer live there or I’d invite you to meet me for lunch at Bellagio. My three little grandchildren persuaded me to move to CA to be close to them. I have not lost my fond memories of living in that exciting place.
Paula Pant
@Barbara — I love the entrepreneurial spirit here! I feel more energized (maybe its the sunshine, who knows?) and I’m thrilled about the amazing people who live yet who I haven’t met yet. Everyone’s been ultra-welcoming already.
Oohh — and I signed up for a library card today! I also found an amazing used bookstore right next to Trader Joes, which spells trouble … 🙂
David @ VapeHabitat
If you like it there, I am glad for you. Don’t know much about living in Vegas, hope to learn more from your blog.
Andrew
So where are you living? Vegas, North Vegas, Henderson, Summerlin…
Been all over Vegas so wondering where you landed…
Good luck.
Paula Pant
@Andrew — I’m downtown, near the Container Park. I love the walkability of the neighborhood! 🙂
Thanks!
Inara Michele
Great neighborhood. A lot more vibrant and safer since Zappos’ presence began.
Julianne Le
Hey Paula! I’ve been reading your blog for years, and I love your ideas and content. This has to be my favorite PF blog. You’ve been so helpful to me in my personal finance journey.
Welcome to Vegas! I’ve been living here for most of my life. And welcome to the downtown neighborhood! I work for the Life is Beautiful festival and our office is downtown. Hope you can come check it out! And maybe I’ll see you around? And if you want any recommendations on restaurants, shops, things to do downtown, please don’t hesitate to reach out 🙂
Andrew
Did you buy a place in LV or are you just renting for now?
Paula Pant
@Andrew — We bought a two-bedroom condo, and absolutely love it. 🙂 It’s normally a bit of a risk to purchase something right away — as a general rule-of-thumb, it’s better to live somewhere temporarily and get to know the area first — but after spending a month here in January, we had no doubt in our mind that we knew exactly where we wanted to live.
mobilehomegurl
Congrats on your recent move Paula, very cool to hear!
I’m an outdoor person as well. Love the Southwest. 🙂
One thing I do miss about Europe is the landscape. Finding places with fewer shopping centers and parking lots can be challenging here in the states. But, not impossible!
Funny about the casino jokes. Oh, the irony! But, I guess it’s a great way to open up a talk or have a conversation especially among the personal finance crowd. LOL!
Looking forward to hearing more about your new journey! 🙂
Mike Damazo
Congratulations on your move to the West. Vegas is definitely awesome, I’m betting you will invest in a property while over there.
Sylvia
Congratulations on your big move! I really do feel that city has a plethora of opportunities. You go, girl!
ericka
I love the word plethora. After the 3 amigos. its one word everyone must use weekly.
Mark
Congratulations on the move. I have lived in 9 different states myself and can certainly understand where you are coming from. I lived in Denver, Phoenix, and Park City which kind of is similar to where you are as far as open country and mountains go.
I always tell people it takes at least 2 years to get adjusted to wherever you move because the first neighborhood is just there for you to move into. Eventually you end up finding your ideal neighborhood and move again. All that usually happens within the first 2 years.
Even if Nevada does not have income tax, would you not still be paying Georgia income tax?
Paula Pant
@Mark — Wow, 9 states?! That’s fantastic. Nevada is my 4th state of residence (after Ohio, Colorado and Georgia), and I definitely get the sense that the more I move, the more I have a clear idea of my likes and dislikes.
Great question about the Georgia income tax. I’m assuming you’re referring to rental properties.
My Schedule C income (profits from my online business) falls under Nevada tax jurisdiction, because I’ll be living in Nevada at the time that I earned it. My Schedule E income, rental property profits, falls under Georgia jurisdiction because that’s where the rentals are located. When I file taxes, I’ll file a “resident return” for Schedule C in Nevada and a “non-resident return” for Schedule E in Georgia. The overwhelming majority of our income is Schedule C (myself) or W-2 (Will), so the majority of our tax reporting will take place under Nevada statutes.
Bryan@Just One More Year
Congratulations on your move to Las Vegas and living in the West.
We moved from the SF Bay Area about 4 years ago to northern Arizona for the dream of hiking and the outdoors. It has been a great change for us with the added benefit of lower state income and property taxes. Instant raise!
BTW – Loved the picture. We have the twin brother of your cat!
Paula Pant
@Bryan – Congrats on your move, too! Northern Arizona is beautiful, and I’m excited to spend more time exploring the southwestern U.S.
And you may very well have one of our cat’s siblings! She was a rescue from Colorado, so who knows? Perhaps she has feline family in Arizona … 🙂
Jadeson
Hi Paula,
I am so tired of So Cal and also tempting to move to Nevada. Wife and I are both nurses and we don’t think it would be hard to find jobs. Would it be wise if I move first to Nevada to obtain a job first , rent a place to live and then wife can transition after? We are excited to buy a home but would like to take our time to find the right location.
LaTisha
I’m so glad that you are settling in to your new home! For all of the reasons you listed, I know that Nevada will treat you well. I’m trying to get to warmer weather myself. Considering that I sort of moved west last year, I’m closer now than I was before.
Most encouraging were your comments on where you and Will started. My husband and I also have a 5 year plan that includes eliminating the last of my student loan debt and saving enough so I can ‘retire’ when he officially retires. That means that I have 5 years to build my location independent business.
Sometimes its easy to forget where you started. I remember when we first met a few years back I was working on getting rid of my credit card debt. You wrote about setting the damn deadline and I set up my plan to leave my job debt free. I accomplished that with your written encouragement to “pay if off already!” haha
I guess my point is… Keep writing about your journey! It’s such an inspiration and motivation.
Nancy
I am looking for a place to move and have my house for sale. I am 68 and disabled but could work part-time at certain jobs. I live on social security which is a little below the poverty level. So I qualify for Medicaid in most places once I buy a property and show not much cash in a bank. Two of my friends are moving to Henderson and one night I called an order into a major company and the sales person said she lives in Henderson and works part-time as she is retired. You have me thinking about checking your area out. I will pay cash for a house, or maybe rent for a year and decide if I want to buy. I want a home where there are no tornadoes. Am wondering if I could make it in Nevada.
Jody
Welcome to Nevada, Paula! I have lived in Reno so long that I forget that state income tax even exists. Remember we have awesome hiking country here in the Reno/Tahoe area. Let me know if you are ever in this neck of the woods.
Inara Michele
Welcome to Vegas. This is my home town though I was not born here. Thanks to my living here, I have been able to thrive, put money away, and buy a 1/4 acre property that would have been difficult to afford elsewhere. People don’t realize that Vegas has hundreds of parks including gorgeous recreational and wildlife preserve areas, lakes, gorgeous mountains, a ski resort, more churches and spiritual/religious centers per capita than anywhere in the world (except perhaps Rome), beautiful neighborhoods, wonderful wholesome people from all over the country and world, art, culture, entertainment, a large philanthropic movement, jobs and opportunity. My favorite thing about Vegas is that it is the only place I have ever heard of that has the unique combination of ability to earn a high income and low cost of living; many places have lower cost of living or higher average salaries but not both. Vegas calls your bluff about bettering yourself because here you truly have the opportunity to put money away and invest while at the same time keeping a nice lifestyle. Again welcome to Vegas thanks for choosing my town and feel free to reach out to network.
Kenneth
Paula, I love your blog and share it with my kids. I’m addicted. My wife & I (both retired at 55) have been looking at perhaps moving from LA County, California to another state. Nevada is one possibility. So I’m looking forward to reading how well you like Vegas and NV over time. We want to escape the congestion of LA yet stay close enough to California to enjoy visiting with friends and relatives occasionally. Lower taxes are a big bonus! One thing to which I do take issue with, though, is your posting of state marginal income tax rates rather than saying how important it is to check carefully into what the effective tax rates would be for people. For example, my California marginal income tax rate was 9.3% but my effective rate was only 5.1%. Quite a difference. I used a website to compare effective income tax rates between CA and beautiful Montana was shocked to find MT may actually cost us a little more in effective income tax rates than CA even though the marginal income tax rate appears lower. I won’t go into detail why that is, but it is relatively easy to see if you explore the rates a bit & compare them side by side. Each state is different for different people’s incomes & how that income is derived. The effective tax rate is the important one. Looking forward to your next blog!
Jim Eandi
Congrats on your move. I am a retired tax preparer so I understand you loud and clear. I have 3 properties in Idaho and one in the state of Washington. I am looking to buy another on the east coast. Living in CA isn’t all that bad. I have been able to structure my investments so that I don’t have state taxes to pay, however I do pay some to the feds. One more property should eliminate the federal tax payment. We to do a lot of traveling around the country in an RV. One reason for a property further east.
Jim
Elvis
Wow! Congratulation Paula, I’m more than impressed to learn how much you’ve achieved within a bracket of 5 years. Lookin forward to being part of your journey.
Jan
Welcome, and enjoy!
Cathleen
If the kitty winds up disliking Vegas, can I keep her?
Super article, makes me chomp at the bit to live my dreams!
Richard Takes
Hi Paula & Will,
Welcome to Vegas!
We moved to Henderson five years ago and love it.
Thanks for the great website, information and encouragement.
Elizabeth Colegrove
Congratulations!
Loved this post! You said it perfectly! My husband is active duty and we move a lot. We claim Texas residency and the savings really adds up. While living far from our rentals has had its moments we have learned to manage our 6 rentals from anywhere in the country. We currently live 3,000 away from 3 of current rentals. As you mentioned repeadily the point of all of this is to have “passive” rentals!
Best of luck on your newest adventure.
Elizabeth
Ericka
This is great article. Such a interesting choice, I choose Austin because I didn’t know if i could handle a Colorado winter after living in North Carolina in a part that barely gets snow. The interesting thing is if you do not like Vegas you can move again. That’s the beauty in this story. 5 years and 5 houses!!! some people barley go out and make a community of friends in 5 years. At least you had a great game plan. blog is great and really helpful thanks for posting.
Bill
Congratulations on the move! I’m excited about the next article. Keep it coming!
Gabriel
Hi Paula, big fan of your blog and working my way to ditching the 9-to-5. Appreciate your work.
With that said, I would encourage you to research the fresh water situation along the Colorado river basin, Lake Mead, and Las Vegas. This is not to rain on your parade, but just worth mentioning that supply is going down and your article can infer how much demand is increasing. Please be mindful of this going forward and keep a good supply of bottled water at the new place.
Thank you for the advice and good luck in your new endeavors.
Ingrid
Hi Paula, I’ve been reading your blog now for about 2 years. Can you share what your online business is. I have real estate investments but was also thinking about doing an online business. Do you have any suggestions?
Paula Pant
@Ingrid — My online business is an internet marketing company that specializes in helping small businesses in the real estate and finance spaces (like brokers, CFPs, CPAs, etc.) develop their web presence. (The industry term for this is ‘inbound marketing.’) Here’s the website: http://catalystwriter.com
If you’d like to launch your own enterprise: First, identify your skills. What knowledge do you hold that others can benefit from? Then identify your target audience. Who wants these skills? Check out these two articles about how to get started:
1) https://affordanything.com/2014/11/24/flex-your-hustle-muscle-side-hustle-ideas/
2) https://affordanything.com/2011/11/18/give-me-money-finding-freelance-work/
Ingrid
Thanks Paula. Looking forward to more articles.
Bob Mc
Love your articles, particularly this one as I’ve been contemplating a move to Las Vegas. I keep being told Vegas will soon suffer development problems due to a lack of a continuous supply of water. Have you heard this rumor and will it affect how you do live and do business in the state?
Paula Pant
@Bob — Thank you!
I’ve read extensively about the water crisis. The Las Vegas Sun created a great multimedia feature on the issue: http://lasvegassun.com/news/topics/water/
Based on the trends we’re currently seeing, I don’t believe that growth will halt. I DO believe that water prices will continue to rise, and as water becomes more expensive, people will use less of it. For example, many people in Las Vegas grow grassy lawns (?!?!), which is ludicrous. Excesses like that should — and will — stop.
So … I might not open a lawn mowing business here. 🙂 But I wouldn’t hesitate to invest in residential rental properties if conditions are right.
Roger
Hi Paula. With this move will you still expand your Atlanta empire? BTW, love the airbnb experiment. Wife and I considered doing that too but seemed like too much hands on.
Paula Pant
@Roger — I might! I’m not committing to any decisions (one way or the other), but yes, I’m totally open to buying more properties in Atlanta.
And thank you for the compliment about the Airbnb experiment! It’s been a fun run. 🙂
Alina
Oh man, I wish you’d come to Seattle, WA area to research a possible place to move to! The outdoor adventure options are breathtaking, the winter is mild, and the best kept secret – it doesn’t RAIN ALL THE TIME! Anyway, if you ever get a chance to come to Seattle for a visit, I’d love to meet up!
Mike Johnson
Hi Paula,
Congrats on the move! I too, love the west. I picked NW Wyoming (I still like winters) because of the beauty, the conservative attitude and no state income taxes.
I’ve had my park managers run my mobile home parks for months while I was states away and everything worked out fine. Good systems and a good manager keeps things rolling. I currently own parks 25 miles, 50 miles and 750 miles from my home so it’s very doable.
My first park owns many of the trailers so there is tenant turnover and repairs and rehabs now and then. I tired of that so my next two parks are lot rentals only. Far, far, far easier and way more passive (95%, just manage the manager). All my future parks will be lot rental only.
What I like most about mobile home parks is with one large enough property (50 or more lots) you typically can retire from a job immediately and live off your park income. The park will earn enough to pay a big mortgage, a manager, all park bills and all your personal bills too. One good park provides instant, 95% retirement with passive income. No having to save 40 years, no having to depend on the stock market and no worries about out-living your savings because you get fresh new income each month.
Good luck in Vegas!
MJ
PaulinSeoul
Could you please do a post or ten about buying real estate in Las Vegas? I love that city. Got married to my Korean wife there. What does the foreclosure market look like? Are you planning to buy your next rental properties there? Any tips and or look into the landscape there would be appreciated! Great blog!
Hulu
Thank for this amazing post! We were discussing where to live in the long term today but a clear answer is not surfacing quickly. We love Boston except:
High cola
Cold winter
So we’ll probably snowbird. Any suggestions on the best place for a young family? Was thinking SW Fl, Thailand or Costa Rica.
Looking forward to your post on maximizing property management resources. Would love to get onto the next biz idea!
Paula Pant
If Thailand is a possibility, I’d highly recommend it — cheap cost-of-living, beautiful setting, great ex-pat community, friendly people, and amazing food. It’s one of my top choices for living overseas. 🙂
Hulu
Thanks Paula! My family is from Bangkok so there’s even more reasons to try it for a few months. I potentially have a 3 month paternal leave coming up…not sure we can really go wrong!
Paula Pant
Nice! I love Bangkok. Lumphini Park is one of my favorite urban parks in the world.
al
I’d like to see a thoughtful response to the ethical issue of: If a state is raising less money by taxing its citizens less income/sales/property then who/what in the state budget is getting less funding? Education, environment, healthcare for low income…..etc.
Maybe this is an assumption on my part, but my concern of living in one of these states is that someone is paying the price…. most likely it is those at the lower end of the economic pyramid and I don’t think that bodes well for long-term well being.
Paula Pant
…. or they’re getting their revenue from hotel and alcohol taxes, which bring in significantly more revenue here than in most other states. (Compare hotels/alcohol in, say, Fargo, North Dakota vs. Las Vegas.)
Or, additionally, they’re more efficient at managing money. Less waste, less corruption. For example: The public school system in Las Vegas is well-regarded, which is more than I can say for many parts of Atlanta.
In fact, Atlanta’s schools are known for systematic corruption. “Investigators concluded that cheating had occurred in at least 44 schools and that the district had been troubled by ‘organized and systemic misconduct.’ Nearly 180 employees, including 38 principals, were accused of wrongdoing.” — NYTimes)
Taxing your own citizens to the hilt does not necessarily equal more revenue or more efficient public services.
It sounds like you’re making a logical fallacy: You’re assuming that all states are equally efficient, all states carry equal levels of corruption or lack thereof, and all states collect an equal share of taxes from their (out-of-state) visitors proportionate to their citizen-generated taxes. That couldn’t be further from reality.
MaxinVegas
Paula-
Welcome to the desert! We just moved back after 3 years in Texas (we can only live in non-personal income tax states) and while I’m indifferent to being back here, my significant other is elated to be teaching here!
However, after someone that has lived here and went to UNLV, while working on The Strip I want to clear the air about how the state funds itself. You are 100% it collects a majority of its money on hotel and alcohol taxes. Shockingly, Nevada has the highest taxes in the country on alcohol! It is levied on distributors as they take delivery of the product in there warehouses.
As for property taxes, it is in the state Constitution that taxes cannot be more than 3% of assessed value. Assessed values are low also due to a crazy formula used by the state/Clark County. Property taxes are quite low, but the base is consistent that there is plenty to go around, even more so now that housing has recovered from the lows of 2008-2011.
I cannot wait for a meetup or such downtown…might get me out of burbs in Henderson.
Also if you need a good account here feel free to email me…got a guy that is amazing and specializes in tipped and self-employed returns. He does taxes for multiple sates as well.
W Williams
Awesome, Paula! I’ve been following your blogs over at BP for awhile and wandered over here just in time to read about your move.
You mention “mega cash reserves” for your rental properties. Could you go into more detail about this in a future blog? (Or, if you have already, please excuse my ignorance and point me in the right direction.)
Paula Pant
@W Williams — Thanks! Great timing! 🙂
I keep six months of expenses (property expenses, not just personal expenses) in a savings account. If EVERY property is simultaneously vacant for six months, I’m able to cover these payments from savings, plus have extra money for any minor repairs and maintenance that might arise during that time. (That’s a highly unlikely scenario, for a number of reasons, but it’s nice knowing that the worst-case is covered.)
I’ve contemplated moving this money into a very conservative index fund — like a fund with a 60/40 or 70/30 balance between bonds and large-cap stocks — in order to combat inflation while maintaining liquidity. I haven’t made the move yet, but I’m not ruling it out. 🙂
Laura
Is there anywhere on your site, or do you recommend any resources for figuring out taxes, especially property taxes on multifamily dwellings? We just bought a 3 family and had an accountant do the taxes, but I was so surprised the amount we were taxed on the rental income, when all we do is put it toward part of the mortgage – we must be doing something wrong!
Paula Pant
@Laura – Taxes are complex and should be handled by a CPA who specializes in working with real estate investors. Here are a few things to keep in mind:
1) You cannot write-off renovations and upgrades. You must depreciate these over time, rather than deducting these. If you make a $10,000 kitchen remodel and a $20,000 roof replacement, for example, you can’t deduct $30,000 from this year’s tax bill. You need to depreciate each of these items according to their particular usage and lifespan — e.g. the roof is expected to give you #X years of usage; the cabinets and countertops will give you #Y years of usage. If the IRS says that an item holds a 28-year useful lifespan, you deduct 1/28th of its cost per year, regardless of the fact that you paid everything upfront. This can create serious cash-flow issues during the years you remodel, if you’re not aware of planning for this.
2) Rental properties are passive income, and therefore must be filed as “passive income” on your tax forms (Schedule E), as opposed to “active income” from a business (Schedule C). Because this is passive income, it can’t be offset by losses from other active businesses. It can only be offset, to a limited amount, by passive losses.
3) You mention putting payments towards the mortgage. Your equity portion of the payments cannot be written off; only the interest, taxes and insurance portion of those payments are deductible.
Hope that helps!
Laura
Thank you!
Donna Freedman
Nice. Congratulations!
Mariana
“renting out a unit from Brazil…” I was born and raised there, so this has spiked my interest! Whereabouts in Brazil?
Curious!
Terry
Hi Paula,
What’s your take on someone moving to Oregon? I love their no sales tax but not sure about liking their high income and property taxes.
Isabel
Congrats on the move Paula! I have lived in San Diego and loved it so much-cool to hear it was one of the contenders! Curious to hear what made you decide on Las Vegas vs. San Diego. Your neighborhood sounds really cool-is living in a walkable neighborhood in Las Vegas cheaper than Atlanta?
Paula Pant
@Isabel — Thank you!! Yes, San Diego was definitely a top contender — we even started telling our friends in SD that we’d probably move there. We changed our minds at the last second. It was a tough choice. 🙂
LV and Atlanta are fairly similar in terms of prices. When the recession hit, the four hardest-hit cities were Las Vegas, Phoenix, Atlanta and Miami. LV & Atlanta have both recovered significantly since 2009 – 2011 lows (I assume the same is true for Phoenix & Miami although I don’t know those two cities nearly as well), although they still trail the rest of the nation.
Chris
Paula,
If you do decide to purchase personal or rental real estate in the greater Las Vegas area and are looking for a real estate agent, feel free to contact me. My mother has been a realtor there for 31 years and my brother has been a realtor there for about 23 years. They both live in separate areas of Henderson.
Although I live currently live in California, I own Vegas area rental properties with both of them. My brother also provides property management services for other investors.
I hope you enjoy it there. It can be windy and the traffic lights seem to take forever to change.
Ella Blue
Congratulations on the move! I really wish I had it in me to move that far away from my family. Most of my family is concentrated in an area that is not a super pricey place, but definitely is not considered an area with a low cost of living.
Free to Pursue
I love the choices you listed above…all except NYC. Not sure what the attraction is there, other than from a tourist’s point of view.
Congrats on the decision and on the move. Best of luck to you in your new surroundings.
Jeff
First off congrats on the move! Also, I just wanted to say as a financial ninja newbie, thank you for saying to live a little too! Its very easy to get caught up in the saving and planning and for me at least seems a little daunting at times. As long as you have your head on straight like you said and you make good choices, you can have that cake and it it too 🙂
Tim
Welcome State Neighbor… I’ve across the border about 4 hours inside California… I LOVE living in the Mojave desert except for my allergies to Joshua Trees, Tumble weeds, and all “Russian Thistle” variants that grow out there in the South West..
I’d love to chat sometime about how you mange your rentals long distance… I have 1 family home in Michigan which is my former home but decided to make it a rental upon moving out West…
Well an the CA taxes are a real drag… Gas is crazy expensive, but I’m a cycling commuter so that doesn’t impact me much..
cheers!
Melanie @ Dear Debt
Congrats! Sounds like a fun adventure. I loved learning more about your story. So inspiring! I hope to be in a much different place in 5 years. I’ve been putting 2-3k per month to debt and can’t wait to invest and travel more once I’m debt free.
Kurt
Wow, sounds exciting. And remember when you’re hiking in 110F, ‘it’s a dry heat!’ 🙂 I know the housing collapse crushed Vegas. Is recovery complete, or are there still lots of relative bargains?
Terry
Hi Paula,
What’s your take on someone moving to Oregon? I love their no sales tax but not sure about liking their high income and property taxes.
Andrew@LivingRichCheaply
Congrats on the new adventure and the move! I live in NYC and sometimes I wonder how much better off financially we might be if we lived in a lower cost of living area. However, my job isn’t location dependent (I’d likely have to take the bar exam again) and our family/friends are here. I guess the trade off is the expensive cost of living. And the e-mail you mentioned from a reader sounds somewhat like me…I do have student loan debt but I am in a pretty good financial situation. I’d love to “retire early” but the high cost of living area is a hindrance…plus I tend to worry…especially when I have a wife a child to think about. I’m definitely working on getting some passive income though…first rental property just closed. And please don’t cry out for humanity =) but I work in government and have a pension. It’s a big penalty if I retire early and the greedy part of me thinks that I should stay another 20 years to get the full benefit rather than leaving in like 10!
Nicholas
Hi Paula,
My wife and I are both 33 and we should be retired next year living off of rental property income. We have a mix of both residential and commercial, now totalling 20 units. I work full time and she takes care of rentals and our daughters. We want to take our 4 daughters overseas(probably Bangkok first) to start our retirement but have no idea how to start. Do we just buy tickets and figure it out when we get there or do you recommend more planning before we leave home. I think the first trip will be 3-4 weeks. If you have wrote about this before please direct me to that. Thank you so much for helping so many people. If it wasn’t for you and Mr. Money Moustache I would have worked until “normal” retirement age.
Stephen
Enjoy Vegas! I love spending time there. The shows are amazing and it’s always warm compared to 90% of Canada.
As far as your properties, I’m sure they’ll be just fine. It sounds like you’ve built a great business. I just started into owning investment properties and I have them on opposite sides of the country and so far it’s been fine.
Kate
Welcome to Vegas! My family and I moved here when I was 9 (20+ years ago) and my husband was born and raised here. We love it. We’ve traveled all over and we don’t ever plan to move home base. I’m a newbie to your blog and so glad I found it!
Paula Pant
Thank you Kate! Welcome to the blog community! In about a month or two, after I get settled in, I’ll host a reader meetup here in Vegas — so hopefully we’ll meet soon! 🙂
Jim Wang
Great recap of the move and sneaky way to integrate state income taxes into it haha. I had a friend who lived out there for years and mentioned that when you’re a local, the casinos area becomes such a small part of the city (and state) that you stop noticing.
I think LV would fun to live in for a few years but I don’t know if I could handle the dryness. Even when I would go for 2-3 day conferences, my eyes would get so dry, my lips would be chapped, I had to always carry chapstick and eye drops. Maybe the body adjusts?
Glad to hear you made it out there OK!
Will @ Phroogal
EXCELLENT POST!!! I’m looking for a new place to live. And since I’m location independent, I’ll be moving for reasons like entertainment, landscape, and cost of living. I’m sure I’ll get plenty of strange looks as well.
P.S. Did you consider moving to Mexico to save even more money? Probably. Must be too many downsides.
Financial Samurai
Congrats on the move! I was thinking of doing the same thing as well, especially for the tax savings. Maybe 7 months in Vegas, and 5 months in CA. But I think CA is really aggressive in going after taxes wherever you live.
Nice pic with your cat!
S
takalak
Congrats. I am excited to see that you moved to LV. I plan on moving to Nevada for many of the reasons described here, specifically Henderson, NV, a suburb of Las Vegas. I plan to move there from California in 5-7 years once I build my financial nut. Here are my reasons: 1. Nevada has no state income tax. This as you point out is a huge plus. Additionally suburban real estate is cheap ($175k-250k for a 3 bedroom 2 bath house) and cost of goods are reasonable. 2. A warm climate (and a cool but not cold winter as a respite from the summer’s intense heat). Growing up in the Midwest, I’d rather suffer an indoor summer over an indoor winter any day. At least summer mornings (early) are somewhat manageable. 3. A great airport given the size of Las Vegas. You could do better at an LAX, JFK, SFO, ORD, but you can still catch nonstop domestic flights to every major, most mid-level, and many minor US cities. Many nonstop international flights are available to East Asian and European hubs. This is great if you plan on incorporating some short consulting gigs or want to live internationally for part of the year (sweaty summer for example). 4. Amenities. Vegas is not comparable to New York, LA, SF … let’s just say that right away. But you still have world class restaurants, all of the LV strip amenities, world class shows etc. Henderson NV however keeps you away from the tourists, and significantly drops the price of real estate and has very low crime. 5. Availability of outdoor activity. The mountains around Vegas provide tons of great local hiking opportunities. Lake Mead is 45 minutes away for boating and being on the water (at least for now until it dries up!!). The Grand Canyon is a few hours away, as are ski resorts in Flagstaff. 6. Proximity to the West Coast. LA is a short 5 hour drive, as is San Diego. So whatever amenities you lack in Vegas are a long weekend away. If they ever build high speed rail from LA to Vegas you’ll have that too. 7. Friends and family will come to you to visit Vegas. At least every third or fourth year your friends and family will want to experience a Vegas long weekend. They’ll spend a night or two with you, a night or two on the strip. 8. I *believe* rentals are more productive (in terms of rental price to purchase price ratio, rather than appreciation) than on the coasts. Just my two cents. Would love to hear some cons for planning purposes.
Benee
Congratulations Paula on your move!! I’m curious as top why after visiting Austin twice, what your pros and cons were for moving and investing in three.
Andrea
Paula- i have been following you for a few months now, and have been really inspired! This last post has been especially meaningful to me. I am in the process of selling my first home, where I have lived for almost five years. I was super lucky with this, and will now walk away with 160k cash. (Like you, a few years ago, I had all my belongings in a backpack. The funny thing now, is that I’m stressed out about what to do with this money!!! I want to produce passive income. I have been researching real estate in Florida and Texas. (thanks to you, I am now aware of CAP rates, as well as other factors!) I plan on traveling in SE Asia for awhile, and teaching English to see where that takes me. I am torn between spending some time in areas to find a good investment to have in place before I take off, or just stick with a super safe investment in order to keep my principle safe (money market acct!?) until I return and then get into real estate…I plan on being out of the country for a year or so…was just wondering about your thoughts, seeing that I’m kind of going along the same route as you…I have family in Vegas, so perhaps we’ll be able to meet up sometime…
Paula Pant
@Andrea — I think that’s a judgment call based on what you want. As a traveler, I understand that there are times when the travel bug bites HARD. When this happens, it’s easy to obsessively focus on travel. If you’re currently going through a phase where most of your thoughts are focused on your next adventure, then I’d fly to SE Asia. If you force yourself to stay in the U.S. against your own will, then on a subconscious level, you might make a hasty decision (because you’re eager to get out of the U.S. and begin traveling).
But if you’re feeling more casual about travel — like, it’s something you want to do in the next 2 years, but not right away — then it might be worth spending some time in the U.S. understanding the investment landscape.
Neither decision is better or worse. Follow whichever is calling you most strongly. The worst thing that a traveler can do is tether herself to some commitment when she really wants to be unbound. And likewise, the worst thing that someone who wants to be rooted can do is force herself to travel, when she’ll spend the whole journey thinking about opportunities back home.
If you do choose to travel, though, don’t just stick with a money-market account. You’ll get a payout that’s less than inflation. I’d probably put a tiny fraction of it into a conservative index fund (like a Vanguard Target Date 2020 fund), and the rest into a money-market fund. This way, you get some type of inflation hedge, but you also stick with a conservative investment. And if you need to tap the money in one year, but the market is low, you can tap the money-market funds first, while waiting for the Target Date to rebound.
(Normally I suggest TIPS as an inflation hedge, but the minimum duration is 5 years, so that won’t help you.)
If you happen to live in the SF Bay Area, Patelco Credit Union pays 3% on their money market accounts (which is AWESOME!!), but you have to live in the Bay Area to become a member. (Bummer!) I store my savings at SmartyPig, which pays 0.75% APY (they used to pay 1% until recently), and Everbank, which pays 1.11% APY. There may be better options out there, too, so spend some time searching (and let me know what you find!)
Kim
FYI Patelco only pays 3% on the first $2,000 deposited, and it goes down from there.
https://www.patelco.org/Checking-And-Savings/Savings/Money-Market/
Heather
Love your blog! But I have a question about Will’s situation as a location-independent employee earning an income from an employer based in a state that does have state income tax. Won’t Will need to have income tax withheld in the employer’s state, and then file a non-resident income tax return to that state? He can then claim a credit to the IRS on the tax that he paid in that state. At least that is how I understand it.
Paula Pant
@Heather — Nope. As an individual W2 employee, you can income taxes in your own state of residence.
Think about it this way: Target is based in Minnesota. Does this mean that every Target employee pays Minnesota taxes? Of course not. Target employees pay taxes in whatever state they work in — and that includes the Target corporate employees who work from home or telecommute.
Google is based in California. But there are Google employees across the nation. Some of them go to local offices — like the Google Atlanta branch office. And some of them telecommute / work from home.
Does every Google employee file taxes in California? Nope. They pay taxes in whatever state they live in.
Will’s company is based in Georgia, but it has employees in Colorado. Those employees pay income taxes in Colorado.
The IRS cares about where you are located at the time that you generate an income. They don’t care about where your employer’s corporate headquarters are based.
We DO need to pay non-resident-income-tax on our rental properties that are based in Georgia, because the income is generated in Georgia. But when Will (or a Google employee, or a Target employee) works, they generate income in whatever state they live in.
That’s a great question, so I’m glad you asked. Hope that helps! 🙂
Matt Mortensen
I live in Vegas too! The best place to make money in real estate. And now HOA lien foreclosures are the new goldrush. Love Las Vegas real estate!! Glad to have you in town
Jessica
I have lived here ten years and I love it for all the reasons you’ve listed and more. Welcome to Las Vegas.
Mortgage Free Mike
Wow! Congrats, Paula! I am so excited for your move and I am so lucky to have met you along your journey in Atlanta. This is a very interesting post. I admire you for going after the things you want in your life. All of that hustling in Atlanta really paid off for you and Will! Best, Michael.
Shane
Congratulations! I kind of skipped down so forgive me if this already been answered but will you have to pay Atlanta and Georgia taxes on your rental property income since it was earned there?
Shane
You did answer 3 post up, thanks.
Emily @ evolvingPF
Congratulations on your move! So much of this post resonated with me in term of exerting control over where you live and making everything else fall in line. I haven’t quite gotten to that stage of live but am growing closer all the time.
I recently moved to a no-income-tax state as well (woohoo!). We moved for my husband’s job so I didn’t even realize there wasn’t any income tax until I plugged his new salary into a tax withholding estimator.
Unfortunately it is not our ideal state. We want to live in CA (taxes be damed) but that will be the next move. We will enjoy the break on taxes while we can get it (I didn’t realize we can deduct sales tax as I’ve never itemized my deductions but I will in 2016 so thanks!) but won’t mourn too much when we move to our dream city – San Diego, actually – and pay through the nose in taxes.
Paula Pant
@Emily — High-five! Congrats on temporarily living in a no-income-tax state, where you can save extra money. And congratulations on having a clear idea of how you want to ultimately live. Money brings you the freedom to live your best life. Move to your dream city. Do the stuff that matters most. 🙂
John Cooper
Hey if you like hiking and stuff make your way up to St. George Utah. Tons of awesome hikes! I’d give you a list if you where going to go up that way, Make a weekend out of it and go up to Zions. Its worth it if your into that kinda stuff. I grew up there its right on the south west corner of Utah and it really is a beautiful city. On that note where do you hike in Vegas? I’ve spent a good amount of time there but didn’t know there was much to do as far as outdoors stuff goes besides lake mead of course.
Paula Pant
I LOVE southern Utah, especially Zion National Park!! When I was in college (in Colorado) I’d make at least one trip per year to Moab/Arches/Canyonlands/Zion. I think southern Utah is one of the most beautiful areas in the U.S. Thanks for the recommendation; I’ll definitely check out St. George! 🙂
In Vegas, my favorite hiking spot (so far!) is Red Rock Canyon, which is only 20 minutes from my home. I’ve heard that Valley of Fire is also pretty awesome, though I haven’t been there yet. Mt. Charleston is another classic local favorite, especially in the summer (since it’s much cooler up there!) And in the winter there’s a Las Vegas ski/snowboard resort that I’m excited to check out. 🙂
Lisa Phillips
When I teach others on my blog on real estate investing, and rental properties under 30,000 specifically, I HIGHLY emphasize that you use property manager to make sure its as hands off as possible. Because of that, when I go on vacation, I go. I get email updates from property managers, and checks automatically deposited, and I can easily add more properties to the portfolio without breaking a sweat. Why? Because property managers make your business and rental income PASSIVE, and not everyone gets that (but you do, which is why i love cheerleading your content!).
So, I just got back from a week long trip to Cuba, and my next stop – Malta, then New Zealand. My sub30k rentals – are in good hands. I’ll look you up when Im in Vegas, that’s my hometown!
Lisa Phillips
Oh yeah, Valley of Fire for 4th of July – madness! Avoid at all costs ( a fire started and we got out to there), but we LOVE red rock, and Mount Charleston is great for a classy get away 🙂 Well, Vegas Classy, which Im all about 😉 Glad to see we reached the 100 comment marker!
Paula Pant
The triple-digit comment mark for this post! Wahoo!! 🙂
Aaron
what a great read ! we are relocating to Vegas in July/august time….
looking at places out in summerlin. Any advice would be great 🙂
Regards
Aaron
Jenn Sullivan
Hi Paula,
How are you liking Vegas now that you’ve been here a while? My husband and I are in the process of moving from Vegas and are considering Georgia (near Savannah) or Oregon or Washington near to one of their international sea ports. We sold our company at the end of 2015 and have started another and need to live nearer to a seaport. I’m really in love with Georgia and would prefer to be there over anywhere else. Do you miss anything about Georgia?
Paula Pant
Oh, I miss loads about Georgia — the trees, the springtime, the restaurants in Atlanta — but I also enjoy a lot about living in the southwest. There’s no “better” spot; you’ll just need to choose the location that best fits your ideal lifestyle. 🙂
Tiffanie Wood
Do enjoy Las Vegas!!!! Las Vegas is an awesome city! So much to love about the valley. Rentals are on the rise and Mortgage rates are low.
Mrs. Cannon-Finley
Paula:
I love your blog, and the various comments. We are too looking to relocate from the South, in our case Dallas, Texas to Las Vegas (pending retirement) for the same reasons that you did…fun, fun, fun! We pay about $10K a year in property taxes/insurance and for a $360K home here in Texas…. too high I know. In 10 years that’s $100K in property taxes… yikes. Texas is really nice, great K-12 schools, love the people, hate the weather (bi-polar), however my heart is in the West, there we can enjoy our lives more, and work less. We do have 2 income properties paid in full, and 2 pensions, 4 investments to enjoy as well. Thanks for the “sunny” outlook!
Desi Hernandez
I’m about to be 25 and looking to make my first big move out of my grandparents house (I know finally) lol & with my bf of 6 years. We are considering Nevada in general because we like what so far Nevada has to offer. Plus I have a uncle there who always tells me to move. Only thing is – I wouldn’t want to live too close to the strip, just so when I do go down there it doesn’t end my excitement of Vegas all together haha. I currently work & live in Los Angeles, what are some tips you would suggest for us two to start really making the move, I wanna apply to places but what if they want to interview me and I’m over 200 miles away =/ I’m so scared for the possibilities yet excited just feel lost on where to exactly start. Thanks <3
Jessica
We’ve been tossing around the idea to move since last year. I just recently have been laid off and brought it back up to my husband. I have family in Las Vegas and would love to be close to them, we currently live in Texas. He’s been with his job 25 years and is a little reluctant-actually the opposite of us last year, I was reluctant and he was ready. So main issue is we don’t have a lot of money and our kids are still young. I scoped out schools last year and know where I want to live. I’m putting a plan together, but any suggestions or advice? Is it hard to find a job? I have been an Executive assistant for years and think I can get any job until I can actually find the one I need, just to cover bills and a home rental for at least 1 year. Would love any advice. Thanks
Stuart
I definitely prefer sunshine to winter – Vegas is a great choice!
One issue though – DC’s income tax isn’t 8.5% for anyone – it is a universal 5.75%. (And the property tax is a very low 0.46% on average).
Ashley Vera
Me and my husband moved to atlanta a little over a year ago. WE like a lot of things, but we feel cost of living is high compared to what you actually make. Taxes are high, and not as much nature here super close by. We are also 26, and have been west coast dreaming. We are moving to Nevada in a few months because it has the most pro’s of living out west. Originally we planned Seattle, but cost of living is high and rain and more rain. I would love to hear more. About your journey. We work service industry as well. Our plan is to go and save, save, save and hopefully invest.
Savannah
Congratulations on moving to LV, I just bought a home in Henderson by D.R. Horton and I love it, I get similar responses, although I also get some curious that I would buy a home and plan to stay long term, in the end, they visit and secretly wish they lived here too! lol
Angela Moon
Hi there,
my brother moved to Henderson Nevada and they like the place, he has been begging to move there, I am a real estate agent by profession, Atlanta does not have reciprocity with Nevada so I will have to take the class and sit in for my License all over again the thought of this annoys me, but other than that I will love to give Vegas a try, I always wanted to move somewhere else the first day I move to Georgia. I’m ready to move, I too grew up with in the mountains of West Africa.
Corrine
Hi Angela Moon ,
The extra charges of a government on the purchasing of property in the form of general country tax can be eliminate easily with in a seven days according to the rules and regulations of a government,If you write an application with the authentic reasons for a elimination of property tax and also attached a legal documents of a property tax pairs after that submitted in the government office by the tax layers which is helpful for you to approved the claim of your property tax in the seven days without any allegations of a government on the application of your property tax ,Remember don’t write any irreverent reasons in the applications of property tax you want to submit in the office of government and also don’t attached any illegal or extra document of property which increase the chances to refuse or neglect your claim application ,So keep it in your mind all the instructions and requirements given to you by the tax layer after concerning this kind of matter according to the current policy of government .
Thanks
Troy Jeffers
Great job! Do you outline all of your blog posts? I’ve read a few of them now and they are way higher quality than other blogs I’ve read.
Jace Bowen
Thank you so much for posting this. I think this really puts things into a different light. I mean, I have read about this stuff before but the way you write just makes it clearer. If that makes sense lol