Moving from California to Texas: luxury buyers' guide

Taxes at the transaction

California's county documentary transfer tax is modest at $1.10 per $1,000 of value, and in most counties that is the whole story. In the large coastal cities it is not. San Francisco's transfer tax is progressive and reaches 6% on sales of $25 million or more. The City of Los Angeles charges a base city tax of 0.45% and, since April 2023, Measure ULA adds 4% on sales at or above roughly $5 million and 5.5% at or above roughly $10 million; the thresholds are adjusted annually for inflation, and the tax applies to the entire price, not just the portion above the threshold. Santa Monica and Culver City have their own tiered rates. A seller of a $12 million Los Angeles home can face nearly 6% in city transfer tax alone.

Texas has no real estate transfer tax at the state, county or city level. The seller's principal closing costs are the owner's title policy, which Texas custom assigns to the seller, and brokerage commission. Title insurance premiums in Texas are promulgated by the Texas Department of Insurance, so the rate on a given price is the same at every title company in the state; the competition is on service and escrow fees, not premium. Texas is a non-disclosure state, which means sale prices are not part of the public record and comparable sales come from the MLS and appraisers rather than the county clerk.

One California mechanic follows you out of the state. When a nonresident sells California real estate, the buyer or escrow holder must generally withhold 3 1/3% of the sale price and remit it to the Franchise Tax Board unless an exemption or a reduced withholding calculation applies. That is a prepayment, not a final tax, but it ties up cash at closing. Plan the sale of the California home with your tax adviser so the withholding, the federal principal residence exclusion and the timing of your Texas domicile line up.

Taxes on holding: income, property and estate

California's top marginal income tax rate is 13.3%, made up of the 12.3% top bracket and a 1% surcharge on income above $1 million, and capital gains are taxed as ordinary income. Texas has no personal income tax, and a 2019 constitutional amendment prohibits one. The Franchise Tax Board applies a closest-connections test to residency, weighing where you keep your home, family, business, professional advisers and time, and it continues to tax California-source income such as rent from California property and gain on its sale after you leave. A move that keeps the California house and a California business is likely to draw scrutiny.

Property tax is where Texas takes back part of the savings. Under Proposition 13, California assesses at the purchase price, caps annual increases at 2%, and charges 1% plus voter-approved local bonds, so a long-held home can carry a very low bill. Proposition 19 lets owners over 55 move that base to a new home anywhere in the state up to three times, but it narrowed the parent-child exclusion for inherited property. Texas appraises at full market value every year, and effective rates in the major metros commonly run around 2%, so a $5 million homestead can produce a six-figure annual bill. The homestead exemption caps appraisal growth at 10% per year and applies only to a primary residence filed with the appraisal district. Annual protests are routine and often worthwhile.

Neither state has an estate tax or an inheritance tax, so the estate planning question is federal, where the exemption is $15 million per person in 2026. Both states are community property states, so title and marital property treatment will feel familiar. Homestead creditor protection differs sharply: California's homestead exemption is a dollar amount tied to county median home prices and indexed for inflation, while Texas protects a homestead of unlimited value, limited only by acreage, up to 10 acres in a city and 100 acres for a single adult or 200 acres for a family in rural areas.

Agency and disclosure law

California requires the agency disclosure prescribed by Civil Code sections 2079.13 through 2079.24, and dual agency is permitted with the consent of both parties. Sellers deliver the Transfer Disclosure Statement, the Natural Hazard Disclosure Statement covering flood, fire, earthquake fault and seismic hazard zones, and a set of additional statutory notices. Transactions run through escrow companies on California Association of Realtors forms, attorneys are rarely involved in a standard residential sale, and contingency periods are written into the contract rather than fixed by statute.

Texas licensees operate under the Texas Real Estate Commission and must give the Information About Brokerage Services notice at first substantive contact. When one brokerage represents both buyer and seller, the broker acts as an intermediary under the Texas Occupations Code and may appoint separate licensees to each side; the intermediary itself cannot advise either party against the other. Sellers must deliver the Seller's Disclosure Notice required by Property Code section 5.008. Contracts use TREC-promulgated forms, buyers typically pay for an option period during which they can terminate for any reason, and closings are handled by title companies. Homes in municipal utility districts and public improvement districts carry their own statutory notices, and those district taxes can add materially to a bill in newer luxury developments.

What to ask an agent on each side

On the California side, ask the listing agent to model the city transfer tax at your likely sale price, including whether a small price change would cross a Measure ULA or San Francisco threshold, because the tax applies to the whole price once the line is crossed. Ask whether the brokerage will act as a dual agent and how offers from its own buyers are handled. Ask your adviser about Form 593 withholding and whether a reduced withholding election makes sense. If heirs are part of the plan, ask how Proposition 19 changed the value of keeping the property in the family.

On the Texas side, ask whether the broker is acting as an intermediary and which licensee has been appointed to you. Ask for the appraisal district's value history and the prior owner's protest record, and ask whether the home is in a municipal utility district or public improvement district. Ask about flood zone status and the age of the survey, since a new survey is often required. Confirm the homestead exemption filing process and the date by which you must occupy the home. The site's Texas directory is organized by market, which helps when you are choosing among Austin, Dallas and Houston neighborhoods with very different tax rates.