When is a New Homeowner Liable for Property Tax in Texas?


When buying a new home in Texas, you will become responsible for any taxes not paid after the closing or unpaid taxes that preexist closing. It is critical that your realtor or lawyer contact the county title office to determine if there are any tax liens on the property to correctly calculate how much property taxes you and the seller will owe upon closing. Here we will look at who pays property taxes and an example of how property taxes are prorated.

Who Pays the Property Tax on a Home Sale in Texas?

Property taxes are typically paid in advance for the full year, either by the owner or through an escrow account with their mortgage lender. Exactly who pays will depend on the sale’s closing date, the date taxes are due, and the sales agreement. For example, as an incentive to sell, you as the buyer may offer to pay the total property tax for the year. What is important is that before the due date, paying property tax is the seller’s responsibility. But starting on the closing date, it is the buyer’s responsibility as the new owner to pay taxes.

Why Do You Need to Pre-Pay Property Tax When You Buy A House in Texas?

It is the realtor’s or lawyer’s responsibility to check whether the property has any tax liens. When the sale closes, they will be able to calculate how much tax you and the seller will owe. A prorated amount will be paid by the person selling you the property for the period before the sale.

Understanding the important property tax payment dates is essential to understanding this. Property values are appraised on January 1, and notifications are mailed between April and May. Tax bills are sent out on October 1, and payments are due on January 31 the following year.

Prorating the Property Taxes

When it comes to property tax liability, calculating who owes what can be challenging, but thankfully this is typically the responsibility of the title company. But it is still helpful to understand what is happening as, ultimately, you are responsible for paying taxes after you take ownership of the residency.

Suppose you and the seller agree to pay your portion of the real estate tax on the closing date. The closing date is September 16th, and the annual property tax due is $3600. Here are the steps to take to calculate your taxes owing:

  1. Divide the total tax due by 12 to get a monthly amount: $3600 / 12 = $300 per month
  2. Divide the monthly amount by 30 to get a daily amount: $300 / 30 = $10 per day
  3. The seller is responsible for 8 months and 15 days: (8 x $300) + (15 x $10) = $2550
  4. The buyer (you) is responsible for 3 months and 15 days: (3 x $300) + (15 x $10) = $1050

How the money changes hands will depend if taxes were already prepaid in full or partially (for example, the seller was on a payment plan with the county tax office). Your realtor and the title company should be able to explain these to you when working out the sale agreement.


How Often Do You Pay Property Tax in Texas: Monthly or Yearly?

Texas property tax payments are due once per year, but you do have the option to make monthly payments in order to lessen the financial strain. While you only need to settle your property tax account once per year, some mortgage providers may require you to make monthly payments towards them every month through an escrow account. When the payment is due, they then pay the full tax amount on your behalf. Your first year’s taxes for your new home will most likely be included in your monthly mortgage payments if you had to pay them upfront.

For new construction homes, the first-year property tax assessment can be determined either by the sale price or by the cost approach. The latter is based on the replacement value of the house as well as the value of the land. Which could result in a lower appraisal. It is important to note that the appraisal value of your home can change from year to year.

Why Could I Owe More Taxes the Following Year?

Sometimes, new owners get a sudden increase in property taxes the following year after purchasing the property. This increase could be due to the previous property owners qualifying for tax exemptions such as age or veteran status or other homestead exemptions, which you do not, and the prorated taxes were calculated based on these values and deductions. It’s important that when purchasing a property, you as taxpayers make sure your realtor gives you an accurate estimate of your annual property tax based on your exemptions should you qualify.

We Provide a Solution for Property Owners Owing Property Tax in Texas

Founded in 1946, American Finance & Investment Co., Inc. (AFIC) started by serving the financial needs of El Paso and has since grown to become one of the top property tax lenders in the state of Texas, with a complaint-free track record for over 65 years, with the Better Business Bureau.

We offer our clients an affordable, hassle-free way to ensure that your account with the local government tax office is paid in full and will work out a manageable repayment plan for you. AFIC can provide you with an instant quote by completing the form on our homepage. For qualifying properties, we can help you pay off your delinquent taxes and offer you the following benefits:

  • Quick and completely online process
  • No money down
  • No credit check
  • Free 30-day rate match
  • Match competitors and beat their rate by 1%
  • Avoid high penalties and foreclosure

We pride ourselves on finding solutions to suit the unique needs of our clients. If you would like to discuss our property tax loans, please contact our experienced team at AFIC today.

Ernest Eisenberg

Ernest Eisenberg, President of American Finance & Investment Co., Inc. (AFIC), brings a wealth of expertise in non-traditional financing, including property tax loans and non-bank mortgage solutions. His vision is characterized by a commitment to offering flexible financing solutions to Texas property owners.

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If you are over 64 or disabled, don’t get a property tax loan, contact your tax office about a deferral.

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