Taxes on Selling a House in Texas: What to Expect

If you are thinking about selling your house in Texas, you might be asking yourself one important question: “How much of my profit will go to taxes?” I have been in real estate long enough to tell you, while Texas is famously tax-friendly, Uncle Sam still wants his share.

Let’s walk through what you can realistically expect when it comes to taxes and selling a home in Texas. I’ll break down the capital gains situation, common mistakes to avoid, and how to prep smartly so there are no surprises.

What’s Your Texas Home Worth Now?

Before diving into tax talk, knowing your home’s current market value is step one. The housing market in Texas has grown steadily over the past decade. The cities like Austin, Dallas, and Houston have seen tremendous appreciation.

If you bought your house for $200,000 a few years back and it’s now worth $350,000, you’re sitting on $150,000 in gains. But how much of that is truly yours to keep? That’s where taxes come in.

Taxes on Selling a House in Texas

The good news: Texas does not charge state-level capital gains tax. But don’t pop the champagne just yet. You’re still subject to federal capital gains taxes.

The key factors?

1. How long you’ve owned the property
2. Whether it was your primary residence
3. How much profit you’ve made

Let’s explore the nuances.

1. Will I Pay a Capital Gains Tax in Texas?

If your home sale results in a profit, the IRS might expect a cut. This tax is called the capital gains tax, and it applies at the federal level, not the state level in Texas.

The two flavors of capital gains are:

1. Short-term (less than 1 year of ownership)
2. Long-term (more than 1 year of ownership)
   

Long-term gains usually have lower tax rates, and homeowners get a nice exclusion if the home was their primary residence.

2025 Long-Term and Short-Term Capital Gains Tax Brackets

Here’s a look at how the IRS is expected to treat gains in 2025:

Short-Term Capital Gains (Taxed as Ordinary Income):
If you’ve owned the house for less than a year, your profit is taxed at your regular income tax rate (10%–37%).

Long-Term Capital Gains (More than 1 Year):
Rates depend on your income:

Income (Single)	Income (Married Filing Jointly)	Long-Term Tax Rate
Up to $44,625	Up to $89,250	0%
$44,626–$492,300	$89,251–$553,850	15%
Over $492,300	Over $553,850	20%

Federal Capital Gains Tax Exclusion for Sellers

If the house you’re selling is your primary residence and you’ve lived in it for 2 out of the last 5 years, you may qualify for a generous exclusion:

1. $250,000 for single filers
2. $500,000 for married couples filing jointly
   

This means you can pocket that amount of profit completely tax-free.

Capital Gains Tax Exclusion Example

Let’s say you and your spouse bought a home in Austin for $300,000 and sold it in 2025 for $800,000 which means you got a $500,000 as profit. Since it was your primary home and you meet the residency test, you qualify for the $500,000 exemption and owe zero federal capital gains tax.

Sweet deal, right?

2. Does Texas Charge a Transfer Tax?

Nope. Texas does not have a real estate transfer tax. That’s one big advantage over other states like New York or California.

You won’t pay any special state fee for transferring the deed when you sell your home. That’s one less expense to budget for.

3. Does Texas Charge a Statewide Property Tax?

Yes, but here’s the important distinction. Property tax applies while you own the home, not when you sell it.

Texas does have some of the highest property taxes in the country (average around 1.6%–2.3% of your home’s assessed value), but once you sell, your responsibility ends. You’ll just need to settle up prorated property taxes at closing.

4. Does Texas Have an Estate or Inheritance Tax?

No again. Texas does not charge estate or inheritance taxes. So if your property is part of an inheritance, or if you pass it on to family, there’s no extra Texas tax burden.

However, depending on the estate’s value, federal estate taxes may still apply, but that’s a conversation for your CPA or estate planner.

5. What Tax Mistakes Can I Avoid in Texas?

Here’s where decades of experience come in handy. I’ve seen folks trip over the same tax issues when selling their homes.

Common Mistakes to Avoid:

1. Not keeping receipts for major home improvements (these can increase your cost basis and reduce taxable gains)
   
2. Miscalculating the ownership and residency periods for the exclusion
   
3. Forgetting to report the sale when exclusion doesn’t apply
   
4. Ignoring federal tax implications just because there’s no Texas state tax
   

A Top Texas Agent Can Help Reduce Your Costs

An experienced local real estate agent isn’t just there to stick a sign in the yard. They can:

1. Help you price smart to avoid undercutting profit
   
2. Connect you with tax professionals
   
3. Advise on timing your sale to maximize exclusions
   

Sometimes, a good agent can save you tens of thousands in tax strategies alone.

6. What Other Selling Expenses Will I Face in Texas?

Aside from taxes, you’ll likely encounter:

1. Agent commissions (5%–6% of sale price)
   
2. Title and escrow fees
   
3. Repairs or upgrades to prep the home
   
4. Staging and photography costs (optional but helpful)
   
5. Buyer concessions, like paying part of the buyer’s closing costs
   

These aren’t taxes, but they still eat into your net proceeds.

7. How Can I Prepare for Real Estate Taxes in Texas?

Get organized early. A few smart steps can help you minimize surprises and maximize savings:

1. Keep a folder with receipts for all home improvements
   
2. Consult a CPA or tax advisor, especially if you own multiple properties or inherited the home
   
3. Understand if you’re eligible for the capital gains exclusion
   
4. Talk to a local agent about market timing and smart pricing
   

Learn More About Selling a House in Texas

Selling a home in Texas doesn’t have to feel overwhelming. With the right guidance from Houston House buyers, you can keep more of your profit where it belongs: in your pocket.

Want to dive deeper? Check out our other guides on how to sell fast in Texas, buying and selling at the same time, and how to avoid capital gains tax legally.

Take the Next Step

If you’re thinking about selling your Texas home in the next 6–12 months, now is the time to prepare. Talk to a trusted local agent, speak to a tax professional, and understand your numbers.

Because when you walk away from the closing table, you want to be smiling, not surprised by a big tax bill.

Check out our blog guide on if you can sell a house before probate.