Taxes on Selling a House in Texas: What to Expect
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Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
It’s likely you’ve enjoyed living in your Texas home and have been happy that there is no state-level personal income tax. But now the time has come to make a move, and you’re wondering if there are taxes on selling a house in Texas.
In this guide, we’ll explain what to expect and share tips from an expert Texas real estate agent.
To make it easy to follow, we’ve divided this post into seven common questions homeowners ask when selling a house in the Lone Star State.
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Editor’s note: This post is for educational purposes and is not intended to be construed as financial or tax advice. HomeLight encourages you to reach out to an advisor.
Taxes on selling a house in Texas
When selling a house in Texas, you’ll be pleasantly surprised to know that you’ll only have a few taxes to consider, and one of them is actually a federal tax. And while the tax burdens may be fewer in Texas, you need to know what to expect so there are no surprises.
“You’ll want to make sure you understand the full tax liabilities when you sell a home,” says Katie Powers, a top San Antonio area real estate agent who sells homes 62% quicker than average agents in her market. “You’ll want to make sure it’s a great decision and that you are prepared to pay taxes for the year that you are selling.”
Let’s take a look at a set of tax questions you might have when selling a house in Texas.
1. Will I pay a capital gains tax in Texas?
Texas does not levy a state capital gains tax, but you may have to pay federal capital gains taxes on profits from selling your home — unless you qualify for an exclusion.
The federal amount you owe depends on several factors, including how long you’ve owned the home and your income level. The good news is, there are exemptions available for your primary residence, which will reduce or eliminate your capital gains tax bill. (We’ll explain this more in the next section.)
Capital gains are the profits made when you sell an appreciable asset, such as your Texas house. For example, if you buy a property for $250,000 and sell it for $450,000, you have a capital gain of $200,000.
On the federal level, these gains can be considered either short-term or long-term.
- Short-term capital gains are when you sell an asset (such as a house) within a year of purchasing it. Those gains are included in your ordinary income and taxed according to your tax bracket.
- Long-term capital gains are any profits made from the sale of an asset after at least a full year of ownership. For a property sale, those gains are taxed according to the following table.
2024 capital gains tax brackets (long-term capital gains)
Our table below displays the long-term capital gains rates for tax year 2024. Single filers can qualify for the 0% long-term capital gains rate with a taxable income of $47,025 or less. Married couples filing jointly can qualify with an income of $94,050 or less.
| Tax rate | Single filers | Married filing jointly | Head of household |
| 20% | $518,901 or more | $583,751 or more | $551,351 or more |
| 15% | $47,026 to $518,900 | $94,051 to $583,750 | $63,001 to $551,350 |
| 0% | $0 to $47,025 | $0 to $94,050 | $0 to $63,000 |
Source: IRS.gov (Capital gains table)
Federal capital gains tax exclusion for sellers
Most homeowners in the U.S. can take advantage of the capital gains tax exclusion, a tax break for sellers who meet IRS conditions. This is an exclusion on profits from the sale of your primary home. The maximum amount of capital gain that can be excluded is $250,000 for single filers or $500,000 for a married couple filing jointly.
According to IRS Publication 523, to qualify for the full exclusion amount on a home sale, the following criteria must be met:
- The home being sold is your primary residence.
- You’ve owned the home for at least two years in the five-year period before selling it.
- You’ve lived in the home for at least two years within the five-year period before selling it. The years you’ve lived in it don’t need to be consecutive. Certain exceptions to this rule are made for those who are disabled or those in the military, Foreign Service, intelligence community, or Peace Corps.
- You didn’t acquire the home through a like-kind exchange (also known as a section 1031 exchange) within the past five years. This is basically when you swap one investment property for another.
- You haven’t claimed the exclusion on another home in the past two years.
- You aren’t subject to expatriate tax (a government fee paid by those who renounce their citizenship or take up residency in another country).
Capital gains tax exclusion example
If the sale of your house resulted in a gain of $350,000. A single taxpayer who qualified for the capital gains exclusion would be able to exclude $250,000 of that gain, and would only have to pay taxes on the leftover profit of $100,000. If the same taxpayer was married, the couple would be able to exclude up to $500,000 of the gain. In this case, you and your partner would end up paying no additional taxes on the home sale.
“If it is an investment property, then you’ve got to take into account capital gains,” Powers says. “The big thing is, just check with your CPA.”
But even if you or your home are unable to check off all of the IRS qualifying boxes, you may still be eligible for a partial exclusion of the gain. This can happen if the primary reason for your home sale is a change in workplace location, a medical issue, or an unforeseeable event. For more information on these partial exclusion scenarios, refer to IRS Publication 523.
2. Does Texas charge a transfer tax?
Here’s more good news for home sellers, Texas is one of only a few states in the nation that does not charge a transfer tax. This means if you’re selling your Texas home, you won’t have this added expense.
In many states, home sellers or buyers must budget for this tax, which is sometimes labeled a stamp tax, deed tax, or mortgage registry tax. These taxes are charged when there is a transfer of ownership. In some states, sellers pay an additional $300–$3,000 for a transfer tax.
3. Does Texas charge a statewide property tax?
Texas does not have a state-level property tax. However, local governments are allowed to set tax rates and collect property taxes to fund area services such as schools, roads, police, and fire protection. So what you pay in property tax will depend on where you live.
Powers says Texas home sellers should plan ahead and know what property taxes they’ll need to pay at the close of their home sale. “That’s really the main tax you have to plan for. Most people have an escrow account, so it’s already accounted for, but a lot of people don’t. So, you’ve got to be aware that we pay property taxes in Texas.”
According to SmartAsset, Texas has the seventh-highest effective property tax rate in the country, coming in at 1.60%, which is higher than the national average of 0.99%. Typical Texas homeowners pay roughly $3,800 annually in property taxes.
Property taxes are paid in arrears in Texas, which means that when you sell your home, you will only pay property taxes for the period of time you owned the property during the tax year.
Powers reminds her clients that property tax exemptions are available to help reduce or eliminate their property tax burden.
“If you’re living in the home, you do get a homestead exemption in the state of Texas, which gives you a great percentage off of your yearly taxes,” she shares. “It usually equates to a yearly discount of between $400 to $800. If you are over 65, you get an exemption there, too. But the big one is, if you are a disabled veteran, you get discounts on your taxes. If you’re a hundred percent disabled veteran, you pay no property taxes in the state of Texas.”
4. Does Texas have an estate or inheritance tax?
Texas does not have an estate tax or inheritance tax. However, you will still need to adhere to federal estate tax laws.
A related plus, Texas also does not have a state-level gift tax. But here again, you’ll need to manage any federal-level gift taxes and exemptions.
5. What tax mistakes can I avoid in Texas?
“I think the biggest tax mistake homeowners make is never filing their homestead exemption,” Powers says. “That’s the biggest one — and the most frustrating for me. It doesn’t benefit them when they’re selling, but it just means all the years that they were living in that home, they were overpaying for taxes for no reason.”
To avoid capital gains tax surprises, Powers advises sellers to make certain they know their exact homeownership dates. For example, if you sell your home just shy of the two-year mark, it can have significant tax implications.
Another Texas tax pitfall to avoid is not having sufficient records about repairs and improvements you’ve made to your home. These can play a role in lowering your basis, the amount your property is worth for tax purposes.
A Top Texas Agent Can Help Reduce Your Costs
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6. What other selling expenses will I face in Texas?
When selling a house in Texas, there are some additional expenses to consider beyond property and capital gains taxes. These costs can impact your total net proceeds. Here are some expenses you can expect when selling your Texas home:
- Title insurance and title search fees: Title insurance protects against any issues with the home’s title, such as an unknown will, an illegal deed, or even forgeries. The cost can range between 0.5% and 1% of the selling price. A title search verifies that you are the rightful owner and that there are no outstanding judgments. This can cost between $100 and $250 and can be paid by either the seller or the buyer.
- Settlement fees: These traditional fees are usually about 1% of the home sale. They cover the services provided by the title company, escrow company, or attorney who may be overseeing the sale at closing. These are sometimes called escrow fees and are typically split between the buyer and seller.
- Agent commissions: The agent commission fee in Texas generally ranges from 5% to 6%, split between the buyer’s agent and the seller’s agent. In the past, the seller traditionally paid for both agents’ commissions. However, a recent court settlement by the National Association of Realtors is changing this, allowing buyers to negotiate fees directly with their own agents.
7. How can I prepare for real estate taxes in Texas?
The taxes you’ll need to pay from a Taxes home sale don’t need to be a surprise or make you feel anxious. Here are a few things you can do to be more prepared:
- Determine your home’s value: Use an online Automated Valuation Model (AVM) like HomeLight’s Home Value Estimator. This free tool will give you a preliminary estimate of what your home might be worth today. Knowing your home’s ballpark value can help you calculate if you’ll be responsible for capital gains from the sale.
- Save key documents: Ask your tax advisor about the federal and state documents required to file in Texas after buying or selling a house. And inquire about any tax breaks that might be available for your situation.
- Partner with a top agent: Find an experienced Texas real estate agent who can seamlessly guide you through the entire home sale process. They can provide insights about tax implications and maximize your profit.
HomeLight can connect you to top-rated agents in your Texas market. Our platform considers factors like the agent’s long-term performance record, reviews, and their sale-to-list-price ratio. In other words, we find agents who will put more cash in your pocket when you close your sale.
Learn more about selling a house in Texas
If you’re selling a house in Texas, here are some helpful guides from HomeLight’s Seller Resource Center:
- What Is the Cost to Sell a House in Texas?
- When Is the Best Time to Sell a House in Texas?
- Selling a House As-Is in Texas
- How to Sell an Inherited House in Texas
- 10 Closing Costs in Texas Home Sellers Need to Know
- We Buy Houses Companies in Texas
- I Need to Sell My House Fast in Texas: What Are My Options?
- Don’t Fix These 7 Things When Selling Your House
- See the top-performing real estate agents in Texas
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