Texas Real Estate Transfer Taxes: An In-Depth Guide

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By Clever Real Estate Updated December 21, 2021


Whether you're buying or selling a home in Texas, there are fees to consider and responsibilities you'll have to undertake. But what about transfer taxes? This guide serves as an in-depth look at real estate transfer taxes in Texas.

Texas Real Estate Transfer Taxes: An In-Depth Guide

Transfer taxes, broadly defined, are any taxes that are charged upon the transfer of ownership, specifically upon the ownership of property such as vehicles and real estate. This tax is also referred to as an excise tax.

Texas is one of 13 states that has no transfer taxes. So if you're buying or selling a home in Texas, you don't need to worry about them.

Other Considerations

Regardless of who is responsible for the tax, transfer taxes are typically paid at closing. The amount of the tax is included on the HUD-1 settlement forms. Note that capital gains taxes are charged by the federal government, so even in states like Texas that don't have a transfer tax, you'll still have to be aware of the capital gains tax if you're a seller. Capital gains are paid when you file your taxes.

Property Taxes

While it's very beneficial that Texas doesn't have a transfer tax, it does come at an expense. Texas has some of the highest property taxes in the entire country. While for the most part, the national average as far as property taxes go sits around 1.2%, it's upwards of 1.9% and even higher in some areas of Texas.

You'll also have to consider realtor fees, various insurance costs, and other financial responsibilities.

This just goes to show that even though you don't have to worry about one type of fee or tax, that doesn't mean that transferring real estate, whether you're buying or selling it, is low-cost or free. Always be sure to speak with a tax professional as well as your local real estate agent to make sure you haven't missed anything come tax time.

Ongoing Legislation

It's also worth noting that the status of transfer taxes in Texas is not necessarily guaranteed. There has been a long-standing battle at the polls when it comes to how and if real estate transactions should be taxed. While Texas tends to be a very real estate-friendly place to live, there's always the chance that the future voting behavior of its populace will change the transfer tax policy to be less favorable. Because of this, it's always good to be prepared.

Even though Texas doesn't have a transfer tax, it's still important to work with a local, experienced real estate agent to help you through the buying or selling process. An experienced agent can help you with other fees and taxes like closing costs and capital gains tax. They can also be an advocate for you through the entire process.

Both buyer's agents and seller's agents can help you get the best deal, find rebates where available, and some will even work on a flat fee basis.

Real estate transactions are complicated and confusing, and there are a lot of things to consider that aren't necessarily common sense. Whether you're buying your first home or selling your fifth, be sure to work with a trusted agent in your area to navigate the process successfully.

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