Selling Your House to Downsize in Texas

Most people who downsize are not in a crisis: the stairs are harder or family is far away. That leaves time to pick the route that fits and get the tax paperwork right.

Listing versus a cash sale

If the house is updated and you can wait, listing with an agent often nets more money, because buyers with loans compete for well-kept homes. A cash sale trades some price for less work and a set date:

Factor	Listing	Cash sale
Time	Market time, then the buyer's loan	Closing date agreed at the start
Showings	Strangers touring while you live there	Often one walk-through
Repairs	Inspection can bring repair requests	Sold in present condition
Belongings	Decluttered and staged before photos	Sorted on your schedule

Cash tends to fit when the house needs work you do not want to manage, when showings would be hard on your health, or when you are already paying for two homes. Get an agent's estimate and a cash number, then compare the net. Our guides to sale timelines, closing costs and selling as-is help with that math.

Timing the move out

Paragraph 10A of the Texas resale contract, TREC No. 20-19, hands over possession at closing and funding, or under a TREC temporary residential lease or other written lease. It warns that a seller who stays after closing without a written lease becomes a tenant at sufferance. Need extra days? Put them in writing.

Your over-65 or disability exemption and the school-tax ceiling

Tax Code Section 11.13 gives a homestead owner a $140,000 school exemption, and subsection (c) adds $60,000 for an owner who is 65 or older or disabled. The Comptroller says disability is judged by the federal Social Security disability insurance standard.

The ceiling often matters more. Under Section 11.26, a school district generally may not raise the total school tax on that homestead above the level set when you first qualified, apart from new improvements. Subsection (g) lets the ceiling follow you to a different homestead you qualify for the same exemption, as a proportion: the new home's school tax is capped at what it would be, without a ceiling, in the first year you get the exemption there, times the share of the unlimited tax you actually paid on the old home in your last year there. Subsection (h) entitles you to a written certificate with those figures from the chief appraiser of the old home's appraisal district.

Two limits. Where a county, city or junior college district has adopted its own freeze, it carries over only to a new homestead in that same county, city or district under Section 11.261(g). And Section 11.13(h) bars exemptions under that section on more than one homestead in the same year, which matters if you own both houses for a while.

Claiming the exemption on the new home

Exemptions do not move by themselves. File Form 50-114 with the appraisal district where the new home sits. The Comptroller gives the general deadline as before May 1; the form allows a late homestead application up to two years after it. The form asks whether you are transferring an exemption or a tax limitation, so keep the old address, county and certificate handy. Buying after January 1? The Comptroller says you may get the general exemption for the rest of that year if the prior owner did not.

Federal tax on the gain

IRS Publication 523 explains that a qualifying seller may exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly. The core test: you owned and lived in the home at least 24 months of the 5 years before the sale, and took no exclusion on another home sold in the prior 2 years. Two rules matter for older sellers:

• If you become physically or mentally unable to care for yourself and lived there at least 12 months of those 5 years, time in a licensed care facility counts toward residence.
• A surviving spouse who has not remarried and sells within 2 years of the death may qualify for the $500,000 limit if the other conditions are met.

See our post on the two-of-five-year rule, and have a CPA check your numbers. If you receive Medicaid, a sale can change eligibility; see nursing homes and the Texas home.

If there is a reverse mortgage

For a HECM, the most common reverse mortgage, the CFPB says the loan must be paid back when you sell, with interest and fees. If the price beats the balance, you keep the difference. If you sell at appraised value for less than the balance, mortgage insurance covers the rest. These loans typically must be repaid when you move out. If you downsize and a co-borrower stays in the home, the CFPB says that person can stay as long as they meet the loan's ongoing obligations. The payoff comes from your proceeds at closing, so request a written payoff early.

Sorting a lifetime of belongings

• Measure the new place first; it settles many decisions.
• Let relatives claim items early, with a list or photos.
• An estate sale company can sell the rest. Ask how it is paid and what happens to unsold items, in writing.
• For movers, the Attorney General points in-state complaints to the Texas DMV and interstate ones to the FMCSA.

Scams aimed at older homeowners

The Attorney General warns that scammers reach older Texans with a promise or a threat, such as foreclosure, and that no legitimate business contacts you unprompted and then asks for personal information. Close through a title company and deal with it directly. Sign a deed only at closing. Writing about mortgage relief scams, the FTC warns that once you transfer a deed, you are not likely to get it back. The FTC adds that scammers favor wires, cashier's checks and payment apps because that money is hard to recover. Have a relative read the contract before you sign.

Selling to Cash Home Advisors

Cash Home Advisors is based in Fort Worth and buys houses across Dallas–Fort Worth. You can sell as-is without making repairs, and we can close in 7–14 days. We pay all closing costs; your loan or reverse mortgage payoff, property taxes and any liens come from your proceeds, and you see the closing statement before you sign. Se habla español. Request an offer or read how it works.