Who sets your value, and when

Texas separates valuation from collection. A county appraisal district appraises every property as of January 1. Notices of appraised value go out in the spring, and an owner can protest to the appraisal review board. Then the taxing units — county, city, school district, community college, hospital district, and often a MUD or emergency services district — each adopt a rate. Bills are mailed in October.

Payment is due by January 31. On February 1 the account is delinquent and the statutory penalty and interest schedule starts, climbing month by month and adding collection costs later in the year. A tax lien attaches on January 1 each year, before any bill exists, which is why the title company always checks the current year.

Proration at closing

Because Texas bills in arrears, a sale that closes mid-year splits the year's taxes. The seller is charged for the days they owned the property and the buyer takes over from the closing date. If the year's rates are not yet adopted, the title company estimates from the prior year, and the contract governs whether the parties true it up later.

There is one wrinkle worth planning for: if the property carried an exemption the buyer will not qualify for — a homestead exemption, an over-65 exemption, or an agricultural valuation — the tax bill can jump after the sale. That does not change your proration, but it does change what a financed buyer can afford, and it is a common reason a conventional contract falls apart late.

Homestead caps, over-65, and deferrals

If you have a deferral in place and are thinking about selling, get the current payoff figure from the tax office first. Deferred taxes and accrued interest come due when the property is sold, and knowing the number changes how you weigh an offer.

  • A residence homestead exemption reduces taxable value and caps the annual increase in appraised value at 10 percent.
  • Owners who are 65 or older, or disabled, can qualify for a school tax ceiling that freezes that portion of the bill.
  • Owners who are 65 or older or disabled may defer payment on a homestead entirely; interest accrues, but a deferral stops a tax suit while it is in place.
  • A deferral or tax ceiling does not transfer to a buyer, so the payoff and the buyer's future bill both need to be looked at before closing.

MUD taxes and special districts

Much of suburban Houston, Fort Bend, and Montgomery County, along with parts of Denton and Williamson, sits inside a Municipal Utility District that issued bonds to build water and sewer infrastructure and levies its own tax to repay them. A MUD can add materially to a total tax rate, and Texas requires sellers to give buyers a statutory notice disclosing the district, its rate, and its outstanding debt before the contract is binding.

Newer MUDs in fast-growing areas tend to carry the highest rates, which declines as the district's tax base grows. Buyers who did not expect the line item sometimes walk. We already account for it.

When taxes are already delinquent

Unpaid Texas property taxes do not have to be cleared before you sell. The title company obtains a tax certificate showing exactly what is owed across every taxing unit, and the total — base tax, penalty, interest, and any attorney collection fees — is paid from the closing proceeds.

Left alone, delinquent taxes lead to a suit by the taxing units and a tax sale. After a tax sale, a residence homestead or agricultural property has two years to redeem and other property has 180 days, on payment of the purchase price plus a statutory premium. Redemption is expensive, and selling before the sale is almost always the better of the two paths.

What Texas does not charge

Texas has no real estate transfer tax or documentary stamp tax on deeds, which is a real cost difference from Florida, Georgia, and North Carolina. There is also no state income tax, so a Texas sale has no state-level capital gains tax — though federal capital gains rules still apply, and an inherited property normally receives a stepped-up basis as of the date of death. Talk to a CPA about your own numbers.

Frequently asked questions

When are Texas property taxes due?

Bills are mailed in October and payment is due by January 31. On February 1 the account goes delinquent and penalties and interest begin.

Do I have to pay off delinquent property taxes before selling in Texas?

No. The title company gets a tax certificate and the full amount owed is paid from the closing proceeds.

Does Texas charge a transfer tax on a home sale?

No. Texas has no real estate transfer or deed tax.

What happens to my over-65 tax deferral when I sell?

Deferred taxes and the accrued interest come due on the sale. Ask the county tax office for a payoff figure before you accept an offer.

Why is my buyer's tax bill higher than mine?

Exemptions and caps attach to the owner, not the property. A homestead exemption, an over-65 ceiling, or an agricultural valuation ends when you sell, so the new owner's bill can be significantly higher.

Sources

This guide is general information, not legal, tax, or financial advice. Laws change and every situation is different, so talk with a qualified Texas professional about yours.