There are no transfer taxes in Texas. A constitutional amendment that took effect January 1, 2016, prohibits the state and every local government from taxing the transfer of real property, so no percentage-based transfer tax is owed to any Texas government agency when a deed changes hands.1State of Texas. Texas Constitution Article VIII – Taxation and Revenue – Section: Sec. 29 That makes Texas one of a handful of states with no transfer tax at all. The savings are real: in states that charge one, a $400,000 home can trigger $4,000 or more in transfer tax at closing. In Texas, that line item simply does not exist.
Closings still cost money, though. Recording fees, title insurance, and prorated property taxes all show up on a Texas closing statement, and the property tax piece can be substantial. Here is what to expect instead.
How the Constitutional Ban Works
Article VIII, Section 29 of the Texas Constitution bars the state from enacting any tax on the transfer of real property, and separately bars every political subdivision from doing the same. Texas voters approved the amendment on November 3, 2015, and it took effect January 1, 2016.1State of Texas. Texas Constitution Article VIII – Taxation and Revenue – Section: Sec. 29 No county, city, school district, or other local entity can impose its own transfer tax either. The prohibition is permanent unless the constitution is amended again.
What You Actually Pay at Closing
County Recording Fees
The deed still has to be recorded, and the county clerk charges for that service. Under Texas Local Government Code Section 118.011, the base recording fee for a real property document is $5.00 for the first page and $4.00 for each additional page. Counties may also adopt an additional real property records filing fee of up to $10.00 per document.2State of Texas. Texas Local Government Code Section 118.011 – Fee Schedule A standard residential closing records at least the deed and the deed of trust, and the combined fees usually run between $50 and $100. Some counties collect small additional administrative charges on top. None of it is based on sale price.
Title Insurance (Rates Set by the State)
Texas is one of the few states where title insurance premium rates are set by the government rather than negotiated. The Texas Department of Insurance publishes a mandatory rate schedule that every title company must follow, so the price is identical no matter which company handles the closing.3Texas Department of Insurance. Texas Title Insurance Premium Rates Effective March 1, 2026 For reference, a $300,000 owner’s policy runs $1,768 and a $400,000 policy costs $2,262 under the rates effective March 1, 2026.
Custom in most Texas transactions puts the owner’s title policy on the seller, though the contract can allocate it differently. The buyer typically pays for the lender’s title policy the mortgage company requires. Shopping around will not get you a lower rate, but it also means you cannot be overcharged.
Property Tax Proration
The biggest tax-related number on most Texas closing statements is the property tax proration. Texas property taxes are billed in arrears: bills go out in October and are due by January 31 of the following year.4Texas Comptroller of Public Accounts. Paying Your Taxes That timing gap means the seller has lived in the home for part of the current tax year without yet paying any of that year’s taxes.
At closing, the title company splits the annual bill based on the closing date. The seller’s share covers January 1 through the day before closing and shows up as a credit to the buyer on the closing statement. The buyer then pays the full tax bill when it arrives later in the year. If a home closes on June 30 with an estimated annual tax bill of $6,000, the seller owes roughly 181 days of liability, about $2,975, credited to the buyer at closing.
One wrinkle: because the current year’s tax rate and assessed value often are not finalized until the fall, prorations at closing are usually estimated based on the prior year’s bill. If the actual bill comes in higher, the contract may require a post-closing adjustment where the seller reimburses the buyer for the shortfall. Many standard Texas real estate contracts include this language. Confirm it before signing.
Who Is Legally Liable
Texas law makes the person who owns the property on January 1 liable for the entire year’s taxes.4Texas Comptroller of Public Accounts. Paying Your Taxes If a seller owned the home on January 1, the taxing authority can pursue the seller for delinquent taxes even after the property has been sold. The proration credit is a private arrangement between buyer and seller; if the buyer fails to pay, the county can still come back to the seller. Sellers should confirm that escrow arrangements or contract protections are in place before leaving the table.
What Happens If the Buyer Pays Late
Unpaid property taxes become delinquent on February 1 of the year after they are billed. A 6% penalty hits in the first month of delinquency, then an additional 1% penalty accrues each month through June. On July 1 the total penalty jumps to 12%, and interest runs at 1% per month from the date of delinquency.5State of Texas. Texas Tax Code TAX 33.01 – Penalties and Interest By July a delinquent taxpayer owes 18% in combined penalties and interest. Many counties also refer delinquent accounts to collection attorneys around that time, adding another 15% to 20% in attorney fees. By December the total can run 40% to 50% above the original bill.
File for Your Homestead Exemption Right After Closing
If you are buying the home as your primary residence, file for the homestead exemption as soon as the closing is behind you. Homestead exemptions do not transfer with the property; the new owner has to apply. Texas school districts are required to offer a $140,000 homestead exemption, which reduces the taxable value of the home for school district taxes, and many cities and counties layer additional optional exemptions on top.6Texas Comptroller of Public Accounts. Property Tax Exemptions
The general deadline is before May 1 of the tax year. If you buy after January 1, you can receive a pro-rated exemption for the remainder of the tax year, but only if the previous owner did not already claim the same exemption for that year.6Texas Comptroller of Public Accounts. Property Tax Exemptions Applications go to the appraisal district in the county where the property is located. Skipping this step is one of the most expensive oversights new Texas homeowners make.
Situations Where Other Taxes Can Still Apply
Sales Tax on Personal Property Included in the Sale
When a home sale includes items that are not permanently attached to the real estate, those items are subject to Texas sales tax. Freestanding appliances, furniture, lawn equipment, and non-built-in window treatments are examples. Texas imposes a 6.25% state sales and use tax, and local jurisdictions can add up to 2%, for a combined maximum of 8.25%.7Texas Comptroller of Public Accounts. Sales and Use Tax If a $350,000 sale includes $5,000 worth of furniture and appliances, that $5,000 is taxable. Itemize the personal property separately in the closing documents so the sales tax applies only to those items, not the whole purchase price.
Rollback Taxes on Agricultural Land
Buyers purchasing land that has been receiving an agricultural or open-space tax valuation need to watch for rollback taxes. When land taxed at its lower agricultural value is converted to a non-agricultural use, the county recaptures the difference between the reduced agricultural taxes paid and the full market-value taxes that would have been owed, reaching back five years with 7% annual interest on the unpaid difference.
A change of use triggers the rollback. Simply selling the land does not, as long as the new owner continues qualifying agricultural use and applies for the valuation. But a buyer who develops the land or stops the agricultural operation gets the rollback bill, and on a large parcel it can run well into five figures. Verify the land’s tax history before you buy.
Federal Reporting and FIRPTA
No state income tax applies, but the IRS still requires reporting on most real estate sales. The closing agent generally files Form 1099-S reporting the transaction.8Internal Revenue Service. Instructions for Form 1099-S Sellers of a primary residence can often avoid this reporting by giving the closing agent a written certification that the home was their principal residence and that the full gain is excludable under Section 121 of the Internal Revenue Code. A single filer can exclude up to $250,000 in gain and a married couple filing jointly up to $500,000, provided they owned and lived in the home for at least two of the five years before the sale.9Internal Revenue Service. Topic No. 701, Sale of Your Home The certification must also state that there was no period of nonqualified use after December 31, 2008.
If the seller is a foreign person or entity, the buyer must withhold 15% of the sale price under the Foreign Investment in Real Property Tax Act and remit it to the IRS. On a $400,000 sale, that is $60,000 off the top. Two exceptions help residential buyers: if the buyer plans to use the home as a personal residence and the sale price does not exceed $300,000, no withholding is required; if the price is between $300,001 and $1,000,000 and the buyer intends to live there, the rate drops to 10%.10Office of the Law Revision Counsel. 26 USC 1445 – Withholding of Tax on Dispositions of United States Real Property Interests To qualify, the buyer must genuinely plan to live in the property for at least half the days it is occupied during each of the first two years after closing.11Internal Revenue Service. Exceptions from FIRPTA Withholding A buyer who skips this obligation when purchasing from a foreign seller can be held personally liable for the tax.