Texas real estate: property tax, closing costs & insurance
Texas has no state income tax and no real estate transfer tax at all, but county, school-district and city millage combine into one of the highest effective property tax rates in the country — the homestead exemption and 10% appraisal cap matter more here than almost anywhere else.
Property tax in Texas
The effective rate runs about 1.63% of assessed value. No state property tax; county+ISD+city. Homestead appraisal cap 10%/yr; $100k school homestead exemption (2023). Annual assessment growth is capped at 10% for an owner-occupant. A homestead exemption of $100,000 reduces the taxable basis for a primary residence.
Transfer tax & closing costs
Texas has no real estate transfer tax. Recording runs a flat $125. Title insurance is customarily paid by the seller, with a minimum owner’s premium of $328.
Insurance & capital gains
Hail/wind drive premiums; coastal (TWIA) counties higher. No state income tax.
Worked example: a $350,000 ARV flip in Texas
Six-month hold, $45,000 rehab, 15% target profit margin, all-cash. This is the same reverse waterfall the calculator runs — see it live for your actual property.
- After-repair value$350,000
- Rehab budget−$45,000
- Closing costs — acquisition−$5,875
- Closing costs — disposition−$20,150
- Holding costs, 6 months−$4,480
- Target profit, 15%−$52,500
- Maximum Allowable Offer$221,995
If you’re investing
Because Texas has no transfer tax and light closing costs, more of your reverse-waterfall room comes from holding costs than closing costs — a short hold matters more here than in a high-transfer-tax state like New York.
If this is your home
The $100,000 school-tax homestead exemption (2023) and the 10% annual appraisal cap only apply to a homestead you occupy — an LLC-owned or non-owner-occupied purchase pays the full, uncapped rate from day one.
Best suited for: Buy-and-hold investors who want zero transfer tax and don’t mind a higher recurring property tax bill.
Texas FAQ
Does Texas have a real estate transfer tax?+
No. Texas is one of a handful of states with no state or local real estate transfer tax on a deed. Closing costs are driven mainly by title insurance and lender fees instead.
How much does the Texas homestead exemption save?+
The 2023 law raised the school-district homestead exemption to $100,000 of appraised value, on top of the existing 10% annual appraisal increase cap for an owner-occupied home.
Why is my Texas property tax bill so much higher than a similarly priced house elsewhere?+
Texas has no state income tax, so cities, counties and school districts rely much more heavily on property tax to fund services — effective rates commonly run 1.6–2.2% versus a national average near 1%.
See the exact number for your Texas property
Free for your first three properties. No credit card.
Other state guides
Sources: state and county assessor publications, state department of revenue transfer-tax schedules, and title-rate manuals filed with each state’s insurance regulator, effective 2025-01-01. Figures are estimates for planning purposes, not tax or legal advice — confirm with a licensed professional before closing. How the calculator works