Every Texas resale contract prorates property taxes between buyer and seller as of the Closing Date. The mechanics live in Paragraph 13 (Prorations) of TREC's One to Four Family Residential Contract (Resale) -- currently Form 20-19, effective 07/01/2026 and mandatory for use since that date. The proration language itself did not change in the 20-19 revision (the July 2026 form update touched broker-compensation language in Paragraph 12 and federal reporting language in Paragraph 20, not Paragraph 13), so agents working off the prior 20-18 form will recognize this paragraph unchanged.
What Paragraph 13 actually says
Paragraph 13 provides: "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."
Three things to flag for a client reading that for the first time:
- It's a through-the-Closing-Date split, not a full-year number. Seller owes taxes for the days owned January 1 through closing; Buyer owes the rest of the year.
- "May be calculated taking into consideration any change in exemptions" is permissive, not automatic. Nothing forces the title company to build a seller's homestead or over-65 exemption loss into the estimate -- many settlement statements simply prorate off last year's tax bill as-is, exemptions and all.
- The contract itself contemplates the estimate being wrong. The "parties shall adjust the prorations when tax statements for the current year are available" sentence exists precisely because most Texas closings happen before the current year's actual bill exists.
Why the number at closing is almost always an estimate
Texas county appraisal districts (CADs) typically don't certify appraisal rolls until midsummer, and tax offices don't mail actual bills until October, with the statutory delinquency date of January 31 of the following year. A closing any time from January through roughly September is settling taxes that don't technically exist yet as a final number. Title companies handle this by prorating off the most recent available figure -- usually last year's assessed value and tax rate, or a current-year CAD estimate if one is posted. Neither is guaranteed to match the bill that actually arrives.
Two statutory mechanics make the gap bigger than agents expect:
- Exemption loss (Tax Code Section 26.10). If the seller carried a homestead, over-65, or disability exemption that terminates because of the sale, the property's taxable value for that exemption's terminated period gets prorated up -- the statute prorates the tax due using a 365-day fraction for the days the exemption no longer applies. A buyer who doesn't file their own homestead exemption for the new tax year can end up with a materially higher bill than the closing estimate assumed, since the estimate was built on the seller's now-gone exemption.
- Ownership-based reassessment isn't automatic mid-year -- Texas generally values property as of January 1 and taxes the owner of record that day for the full year's roll, with the buyer/seller split handled contractually (Paragraph 13) rather than by the CAD re-cutting a bill. The CAD doesn't issue two bills for a mid-year sale; the parties true up privately, which is exactly what "the parties shall adjust the prorations" is doing.
The bigger risk: rollback and supplemental tax bills
The scenario that actually blindsides people isn't a small proration miss -- it's a rollback tax. Under Tax Code Section 23.55, when land that's been getting the open-space (1-d-1) agricultural or timberland appraisal changes to a non-qualifying use, the CAD can bill back the tax savings for each of the three preceding years -- the difference between what was paid under the ag valuation and what would have been owed at market value -- plus penalty and interest if not paid on time. That lien attaches the moment the change of use occurs, and the additional tax becomes delinquent if unpaid before the next February 1 that's at least 20 days after the bill is delivered. A buyer converting a rural or edge-of-town parcel out of ag use after closing -- building a home, subdividing, running a business on it -- can trigger a supplemental bill covering years the seller owned the property, and TREC's standard contract does not make the seller responsible for that bill unless a special provision or addendum says so.
Paragraph 13 only prorates the current year's ordinary tax bill -- it says nothing about rollback exposure. If a property carries an ag or open-space exemption and the buyer's intended use won't qualify, that needs to be addressed affirmatively, typically in Paragraph 11 (Special Provisions) or a negotiated addendum allocating responsibility for a future rollback bill, not assumed to be covered by the standard proration language.
Not legal advice
This is a plain-English walkthrough of a standard contract paragraph and two Tax Code provisions, not a substitute for a licensed Texas attorney or the title company's tax certificate on a specific file. Rollback exposure in particular depends on facts -- acreage, exemption history, and intended use -- that need a real read of the CAD record before anyone quotes a number to a client.