Understanding the Texas Transfer Tax: A Quick Guide
Selling your home in Texas? You might have some questions about the Texas transfer tax.
Transfer taxes are fees the state, county, or city imposes when property ownership is transferred from one party to another. These taxes can vary widely depending on where you’re located and the specifics of the property sale.
In this guide, we’ll dig into how transfer taxes work in Texas, giving you insight into what you can expect when it comes to transfer taxes in the Lone Star State.
What are transfer taxes?
Real estate transfer taxes are assessed by state or local authorities when the ownership of a property changes hands. According to the Federal Trade Commission, this tax is triggered once the title—or the legal rights to a property—is transferred from one person to another.
The actual tax rate and the responsibility for paying this tax can vary significantly depending on the property’s location, reflecting different state, county, or city regulations.
Who pays for transfer taxes?
Unlike many other states, Texas does not impose a state transfer tax on real estate transactions, which can alleviate some of the financial burden on sellers.
However, property taxes in the Lone Star State are some of the most expensive in the country. In fact, only 13 other states have higher property taxes. Additionally, closing costs can really cut into your bottom line, so it’s important to have a good idea of what you might be paying before the transaction is complete.
For example, property taxes can typically average $2,275 per year in Texas, and this is customarily paid by the seller (based on $125,800 median assessed value or 1.81%)
