The Tax Number on Your Home Isn’t the Number Your Buyer Will Pay
Most Texas homeowners know they have a homestead exemption. Far fewer have thought about what happens to it when they sell. The exemption, the appraisal cap that comes with it, and the senior tax freeze all behave differently once a home changes hands, and those differences affect your pricing, your buyer’s decision, and your next purchase.
Here is what sellers should know, now that the exemption has increased.
What Changed
In November 2025, Texas voters approved raising the school-district homestead exemption from $100,000 to $140,000 of a home’s value. The state estimated it would save the average homeowner about $484 per year. A companion measure raised the additional exemption for homeowners who are 65 or older, or disabled, from $10,000 to $60,000, which can bring their total school-tax exemption to $200,000.
Some online guides still show the old $100,000 figure, so check the date on anything you read.
1. What It Means for Your Buyer’s Math
The exemption lowers the school taxes an owner-occupant pays, which helps a buyer who will live in the home. But it’s worth keeping in proportion. Savings of about $484 a year is roughly $40 a month, while the rise in mortgage rates over the past year has added around $250 a month on a $400,000 loan. The exemption helps, but it doesn’t offset the rate increase, so don’t expect it to move buyers on its own.
It also only applies if the buyer will occupy the home as their primary residence. An investor buying your home won’t qualify, which is one reason owner-occupant and investor buyers see different tax numbers for the same property.
2. The Cap Reset: Where Sellers Can Create a Surprise
Here is the most important point for sellers. Once a home has a homestead exemption, its taxable value can only rise by 10 percent per year, no matter how fast the market moves. That cap belongs to the owner, not the house. When the home sells, it resets, and the new owner’s value starts from current market value.
Take an illustration. Suppose your home’s market value is $450,000, but because of the cap your taxable value is $380,000. At an effective tax rate of roughly 1.9 percent, your bill is about $7,200 a year. Your buyer’s bill would be based on $450,000, or about $8,550. That’s a difference of roughly $1,300 a year, or about $110 a month, that the buyer doesn’t see until their first bill arrives.
For a seller, the lesson is straightforward. Don’t present your current tax bill as what the buyer will pay. A listing that implies low taxes can lead to a disappointed buyer, a tense renegotiation, or a deal that falls apart late in the process. Buyers’ agents know the cap resets, and they’ll run the real number. It’s better to provide an estimate based on market value up front, which builds trust and avoids surprises. Our guide to buyers’ costs and property tax proration at closing covers how this shows up in a contract.
3. Your Taxes at Closing
Texas property taxes are paid in arrears and generally due by January 31 of the following year, so at closing you credit the buyer for the portion of the year you owned the home. If the current year’s bill isn’t out yet, the title company uses an estimate, and how any difference is handled depends on your contract. Ask your title company how prorations will be calculated, and review our net-proceeds guide, so your estimate of what you’ll keep includes this line.
4. Your Next Home: The Exemption Doesn’t Follow You
When you buy a new home, your exemption doesn’t automatically transfer. You must apply on the new property, generally by April 30 of the year you want it to take effect, with your county appraisal district. Your new home’s cap also starts fresh from its market value, which is one reason moving can raise your tax bill even when you buy a similarly priced home.
If you’ve already moved out of your old home and it’s vacant or rented, it generally no longer qualifies as your homestead. Rules for temporary absences are specific, so confirm your situation with your appraisal district before assuming the exemption continues. That also matters if you’re considering keeping your home as a rental, because rentals don’t qualify, and their tax bills run higher. Our guide to building wealth through real estate covers how that affects the numbers.
5. If You’re 65 or Older: Don’t Lose the Freeze
Homeowners who are 65 or older, or disabled, have their school tax bill frozen at a ceiling amount. Selling doesn’t have to mean losing it. You can transfer the ceiling to a new Texas home using a formula based on the percentage of tax you were paying relative to current rates.
Here’s an illustration. Suppose your frozen school tax is $2,000 and, at current rates, your old home would be billed $4,000. You’re paying 50 percent of the current amount. If your new home’s school tax at current rates would be $5,000, your new ceiling would be about $2,500. You must request a certificate from your old appraisal district and apply with the new one, so plan for it before you close.
For seniors considering downsizing, this is often an overlooked benefit. It can also be a reason to compare a smaller home carefully, since a transfer isn’t the same as keeping your old bill.
6. A Hidden Cost of Selling
Long-time homeowners often hold an invisible asset: a taxable value well below market, built up over years by the cap. When you sell, you give that up. It doesn’t mean you shouldn’t sell, but it belongs in the comparison. If you’re deciding between selling and keeping a home you’re comfortable in, or choosing a next home, include the likely change in property taxes, not just the mortgage.
A Seller’s Checklist
Confirm your own exemptions and ceiling amounts with your appraisal district. Prepare a realistic tax estimate for buyers based on market value. Ask your title company how prorations will work. If you’re buying again, plan to apply for the new exemption promptly. If you’re 65 or older, request your ceiling transfer certificate before closing. And if you’re keeping the home as a rental, understand that its taxes will rise.
Common Mistakes
Advertising your capped tax bill as what a buyer will pay. Forgetting that the exemption doesn’t transfer to the new home. Missing the application window for the next property. Moving out and assuming the exemption continues. And, for seniors, not requesting the ceiling transfer certificate.
FAQ: Homestead Exemption for Sellers
Q: What is the Texas homestead exemption now?
A: The school-district exemption is $140,000 of home value, approved by voters in November 2025. Homeowners 65 or older, or disabled, receive an additional $60,000.
Q: Does my homestead exemption transfer to the buyer?
A: No. The buyer must apply for their own exemption on the property if they’ll occupy it as a primary residence.
Q: Will my buyer pay the same property tax I do?
A: Often not. The 10 percent appraisal cap resets when the home sells, so the buyer’s taxable value starts at current market value.
Q: Can I take my over-65 tax freeze to a new home?
A: Yes, in many cases, through a ceiling transfer. You must request a certificate from your old appraisal district and apply with the new one.
Q: Do I lose my exemption when I put my home on the market?
A: Not automatically, but it generally requires the home to remain your primary residence. If you’ve moved out, confirm your status with your appraisal district.
Q: Does the exemption apply to a rental property?
A: No. It applies only to a primary residence.
Property taxes are one of the least visible parts of a home sale, and one of the easiest to get wrong. I help sellers prepare accurate numbers for buyers, plan for prorations, and understand what their next home’s taxes will look like.
If you’re thinking about selling, let’s walk through the full picture before you list. Hablamos en inglés o en español.
(512) 217-3961
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— Maria Aguirre
Mi Casa Agency | Keller Williams Lake Travis
