Are property taxes prorated at closing in Texas?

The exact language, because paraphrases of it are wrong

Proration is not a custom or a title company convention. It is a paragraph in the promulgated contract. Here is Paragraph 13 of the One to Four Family Residential Contract (Resale), TREC form 20-19, in full (TREC 20-19):

"Taxes for the current year, interest, rents, and regular periodic maintenance fees, assessments, and dues (including prepaid items) will be prorated through the Closing Date. The tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes. If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available. If taxes are not paid at or prior to closing, Buyer shall pay taxes for the current year."

Four sentences. Each one does something, and three of them routinely surprise people. Note also that taxes are not the only thing ¶13 prorates — interest, rents, and regular periodic maintenance fees, assessments and dues are in the same sentence, which matters on an HOA property or a home with a tenant in place.

Form 20-19 is the current resale contract, carrying a 05-04-2026 form date (TREC). Condominiums, builder new construction and farm and ranch each use a different promulgated form, and the proration language should be read in the form actually being used.

Why proration exists: the calendar does not line up with the closing

A Texas property tax bill covers a calendar year, and the statement for that year does not arrive until late in it. Nobody is paying in January for the year ahead.

So a June closing splits a year whose bill has not been issued yet. The seller owned part of the year; the buyer will own the rest; and whoever owns the property when the statement lands is the one who pays it. That is what the last sentence of ¶13 is doing: "If taxes are not paid at or prior to closing, Buyer shall pay taxes for the current year."

The practical mechanic: the seller's share of the year is credited to the buyer on the settlement statement, and the buyer pays the full-year bill when it comes. In an ordinary resale the seller does not write a check to the tax office at closing.

"Prorated through the Closing Date"

The split point is the Closing Date as defined in the contract, not the effective date, not the funding date, not the day the movers arrive. Everything ¶13 lists is divided at that line.

Because the current year's rates and values are frequently not final at closing, the figures used are estimates. Taxing units adopt rates in late summer and fall; appraisal districts certify values on their own schedule. A March closing is prorating a year nobody has finished calculating.

Rates do move. Boerne ISD adopted 1.0109 per $100 of taxable value for 2025 after 0.9909 in 2024 (Kendall County). The City of Boerne held at 0.4716 for both 2024 and 2025 (Kendall County). Kendall County adopted 0.377 for 2025 and 0.373 for 2026 (Kendall County). Rates drift by small amounts. Appraised values in a fast-growing county move far more, which is where most of the variance comes from.

Ask the title company which year's rates and values they used. That is a fair, ordinary question and they will answer it.

The exemption sentence is the one that bites

"The tax proration may be calculated taking into consideration any change in exemptions that will affect the current year's taxes."

Read that carefully. It is permissive — may — and it points at a real problem: the seller's exemptions and the buyer's exemptions are not the same, and the current year's taxes can change because of the sale itself.

Where this hurts:

• Buying from an over-65 seller. That seller's school district taxes may have sat under a school tax ceiling, frozen at the amount for the year they qualified, plus an additional $60,000 school exemption. None of that belongs to the buyer.
• Buying from a disabled veteran. A qualifying veteran can hold a total exemption on the residence homestead — the entire appraised value. A proration run off that seller's tax picture can start from nearly nothing.
• Buying from anyone with a long-held homestead. The 10% homestead cap can hold the seller's taxable value well below market. The cap does not transfer.

And the buyer's own exemption does not fill the gap in year one. A residence homestead exemption requires the owner to have owned and occupied the home as a principal residence on January 1 of the tax year (Texas Comptroller). A buyer who closes in June did not. Their own homestead exemption — $140,000 at the school district for 2026 — generally starts the following January 1, with the application due before May 1.

So the current year can be a gap year: the seller's exemptions are gone and the buyer's have not started. That is precisely the situation ¶13's exemption sentence contemplates, and precisely the situation a proration built on last year's bill fails to capture.

Tell the title company, before closing, what exemptions the seller holds and what you will and will not qualify for. They cannot take something into consideration that nobody mentioned.

The true-up obligation runs between the parties, and nothing triggers it

"If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available."

There is a contractual obligation to adjust. This is stronger than most people assume — it is not a courtesy.

It is also weaker than it sounds in practice, for one reason: it runs between buyer and seller, not through the title company. The file is closed. Nobody is holding funds. No system sends a reminder in December when the tax statements come out. The obligation sits in a contract in a drawer while both parties have moved on, and in most transactions nobody ever raises it.

If the variance is large enough to matter — and on a property where exemptions changed, it can be — the practical steps are to calendar the tax statement date, run the actual numbers, and raise it in writing with the other party. How to enforce that obligation if the other side declines is a question for a Texas real estate attorney. The contract itself says so: ¶23 of form 20-19 states that "TREC rules prohibit real estate brokers and sales agents from giving legal advice" and provides fields for each party's attorney.

Where taxes actually appear on the settlement statement

Two other paragraphs in the same contract put taxes on the closing statement in places people do not expect (TREC 20-19):

• ¶12A(1) Seller's Expenses includes "tax statements or certificates." The seller pays for the tax certificate that establishes what is owed.
• ¶12A(2) Buyer's Expenses includes "all prepaid items, including required premiums for flood and hazard insurance, reserve deposits for insurance, ad valorem taxes and special governmental assessments." That is the escrow reserve — money collected up front so the lender can pay the tax bill later.

The reserve deposit is not the proration. They are two different lines doing two different jobs, and confusing them is a common reason a settlement statement looks like it double-charges for taxes. Ask the title company to walk you through both lines.

The escrow shortfall arrives later, and it is not a mistake

If taxes are escrowed, an under-estimated first year does not stay quiet. The servicer collects based on the estimate, the real bill arrives higher, the escrow account runs short, and when the servicer re-analyzes the account the monthly payment goes up to cover both the shortfall and the higher going-forward amount.

That adjustment lands well after closing, and it is almost always traceable to a first-year estimate built on the seller's exemptions. The number to budget from is an estimate built on the purchase price, the current adopted rates for the actual taxing units on that parcel, and the exemptions the buyer personally will qualify for. Kendall Appraisal District publishes adopted rates and exemptions entity by entity (kendallad.org).

Boerne property is in Kendall County, not Bexar County and not the City of San Antonio, so Bexar CAD figures and San Antonio rates do not describe a Boerne bill.

Situations to raise before the option period ends

• Ag-valued or wildlife-valued land. A change of use triggers a three-year rollback, a separate liability from the year's proration, allocated by the contract's own terms.
• New construction. A property that was a vacant lot on January 1 may be appraised as a lot for the current year. The following year looks nothing like the proration.
• A seller whose exemption status is changing mid-year — a death, a trust transfer, a move.
• MUD, PID or special district assessments. Not all of it is ad valorem tax, and ¶13 handles assessments and dues in the same breath as taxes without making them the same thing.
• A tenant in place, since ¶13 also prorates rents.

If the appraised value itself looks wrong after closing, the protest deadline is May 15, or 30 days after the district mails the notice of appraised value, whichever is later (Texas Comptroller).

What to actually do

1. Read ¶13 in your own contract and confirm it is the resale form.
2. Ask the title company which year's rates and values they used, and whether exemption changes were taken into consideration.
3. Ask what the seller's exemptions are. Get the answer before closing.
4. Estimate your own first full-year bill from purchase price, current rates and your own exemptions.
5. Calendar the date current-year tax statements become available, and check the variance against the proration.
6. Keep the settlement statement.

The proration calculation and the funds are the title company's. What ¶13 requires of you in your specific deal is a question for a Texas real estate attorney, values and exemptions are determined by the appraisal district, and tax consequences belong with a CPA.

Related questions

• What happens at a Texas closing?
• Who pays closing costs in Texas?
• Why did my Texas property taxes go up?
• What is the Texas homestead exemption in 2026?
• What is the Texas over-65 property tax exemption and school tax ceiling?

Questions about a specific property?

Call or text 830-446-3847 · Email heath.shepard@kw.com

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This page explains how property tax proration works under the TREC contract. It is not legal or tax advice. Paragraph 23 of the contract states that TREC rules prohibit brokers and sales agents from giving legal advice — take contract interpretation to a Texas real estate attorney, the calculation to the title company, and tax consequences to a CPA.