There are no transfer taxes in Texas. The state constitution bans any state or local government from taxing the transfer of real property, so when a home or piece of land changes hands, no percentage-based transfer tax is owed to any Texas government agency. What buyers and sellers do pay at closing is a mix of recording fees, regulated title insurance premiums, and prorated property taxes, along with a few situational charges that only apply in specific circumstances.
The Constitutional Ban
Article VIII, Section 29 of the Texas Constitution prohibits any tax on the transfer of real property. Subsection (a) bars the state from enacting one, and subsection (b) 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
The savings compared to other states are real. Many states charge transfer taxes ranging from a fraction of a percent to over 2% of the purchase price. A $400,000 home in one of those states could trigger $4,000 or more in transfer taxes that simply do not exist in Texas.
What You Actually Pay at Closing
Even without a transfer tax, a Texas closing still involves several line items. The two universal ones are recording fees and title insurance.
County Recording Fees
The county clerk charges a fee to officially record the transfer. These fees are based on document length, not property value. 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.2State of Texas. Texas Local Government Code Section 118.011 – Fee Schedule Counties may adopt an additional real property records filing fee of up to $10.00 per document.
A typical residential closing records at least two documents, the deed and the deed of trust securing the mortgage. Combined statutory recording fees usually total somewhere between $50 and $100. Some counties add administrative charges for archiving or records management on top of that.
Title Insurance
Texas is one of the few states where title insurance premiums are set by the government rather than the market. 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 you choose. Under rates effective March 1, 2026, the formula starts with a base premium of $780 for a $100,000 policy, then adds $4.94 per $1,000 of value above $100,000 for policies up to $1,000,000.3Texas Department of Insurance. Texas Title Insurance Premium Rates Effective March 1, 2026
In practical terms, a $300,000 owner’s title policy runs $1,768, and a $400,000 policy costs $2,262. In most Texas transactions, the seller pays for the owner’s title insurance as a matter of custom, though the contract can allocate the cost differently. The buyer typically pays for the lender’s title policy required by the mortgage company. Because premiums are regulated, there is no shopping for a lower rate, and no risk of being overcharged.
Property Tax Proration
The largest tax-related cost in a Texas closing is the proration of annual property taxes. Texas bills property taxes in arrears: tax 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 means the seller has been living in the home for part of the current tax year without yet paying any of the current year’s taxes.
At closing, the title company splits the annual tax bill based on the closing date. The seller’s share covers January 1 through the day before closing, and the buyer covers the rest. The seller’s portion 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.
A concrete example: if a home closes on June 30 and the estimated annual tax bill is $6,000, the seller owes roughly 181 days of liability, or about $2,975. The buyer receives a $2,975 credit at closing and later pays the full $6,000 when the bill arrives.
One complication. Because the current year’s tax rate and assessed value often are not finalized until the fall, prorations at closing are usually estimated from 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 language for this, but confirm it before you sign.
One more thing sellers should know: Texas law makes the person who owned the property on January 1 liable for the entire year’s taxes. If the buyer fails to pay the tax bill after closing, the county can still pursue the seller.4Texas Comptroller of Public Accounts. Paying Your Taxes The proration credit is a private arrangement between the parties, not a shift of legal liability.
File Your Homestead Exemption Right After Closing
Buyers who plan to use the property as their primary residence should file for a homestead exemption promptly. The exemption does not transfer automatically to a new owner. 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 add optional exemptions on top of that.5Texas Comptroller of Public Accounts. Property Tax Exemptions
The general deadline to file 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 year, but only if the previous owner did not already claim the same exemption for that year. Applications go to the appraisal district in the county where the property is located. Missing this step is one of the most common and expensive oversights new Texas homeowners make.
Situational Costs
A few charges only apply in specific circumstances but can matter a great deal when they do.
Sales Tax on Personal Property Included in the Sale
If a home sale includes items not permanently attached to the real estate, such as freestanding appliances, furniture, or lawn equipment, those items are subject to Texas sales tax. The state rate is 6.25%, and local jurisdictions can add up to 2%, for a combined maximum of 8.25%.6Texas Comptroller of Public Accounts. Sales and Use Tax Itemize personal property separately in the closing documents so tax applies only to those items, not the full purchase price.
Rollback Taxes on Agricultural Land
Buyers of land carrying an agricultural or open-space valuation need to know about rollback taxes. When ag-valued land 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 difference. Selling the land alone does not trigger the rollback if the new owner continues qualifying agricultural use and applies for the valuation. Developing the land or ending the agricultural operation does. On a sizable parcel, the bill can easily run into five figures.
FIRPTA Withholding for Foreign Sellers
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.7Office of the Law Revision Counsel. 26 USC 1445 – Withholding of Tax on Dispositions of United States Real Property Interests Two exceptions apply to residential purchases: no withholding is required if the buyer plans to occupy the home and the price is $300,000 or less, and withholding drops to 10% for prices between $300,001 and $1,000,000 with the same occupancy plans.8Internal Revenue Service. Exceptions from FIRPTA Withholding Buyers who skip this withholding when purchasing from a foreign seller can be held personally liable for the tax.
Federal Reporting on the Sale
Even without a Texas transfer tax, the IRS still requires reporting on most real estate sales. The closing agent generally files Form 1099-S with the IRS, so the transaction appears on the seller’s federal tax record.9Internal Revenue Service. Instructions for Form 1099-S
Sellers of a primary residence can often avoid the 1099-S filing by providing a written certification to the closing agent. To qualify, the seller certifies under penalty of perjury that the home was their principal residence and that the full gain is excludable from income under Section 121 of the Internal Revenue Code. That provision lets a single filer exclude up to $250,000 in gain, and married couples 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.10Internal 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, 2008.9Internal Revenue Service. Instructions for Form 1099-S