Selling in Austin
High Basis, High Taxes, And Houses That Got Left Behind
Austin spent years as one of the fastest-appreciating housing markets in the country, and that has two lasting effects on the people we talk to. Long-time owners are sitting on a very large gain relative to what they paid, and the tax bill on a house has grown into a serious annual cost even for someone who owns it outright.
The second effect is subtler. When prices rise quickly, the retail market gets selective. Buyers with large budgets expect finished houses, and the older, smaller, unrenovated house on the same street becomes conspicuous. Plenty of Travis County housing that would be entirely normal in another Texas city is treated here as a teardown or a project, which means its buyer pool is investors and builders rather than families.
Add the accessory dwelling units, garage conversions and short-term rental setups that a decade of high rents encouraged, many of them built without permits, and you get a lot of houses that are worth real money and are difficult to sell conventionally.
Permits, ADUs And Short-Term Rental History
Unpermitted work is the recurring Austin problem. A garage converted to a living space, a casita in the back yard, a deck, a second kitchen. It adds real utility and real value, but an appraiser may decline to count the square footage and a lender may require it either permitted retroactively or removed. Retroactive permitting is slow and sometimes simply not possible.
Short-term rental history brings its own paperwork. If the house has been operated as one, licensing and local rules are part of the file, and a buyer intending to continue that use will have questions the seller often cannot answer.
Then there is the ground itself. West of the city the limestone and thin soil make septic systems, wells and drainage into real inspection items, and a failed septic is a funding condition rather than a negotiating point. We buy houses with failed septic, unpermitted additions and expired rental licenses, because none of those require anyone's approval for us to close.
Travis County Closings And The Tax Question
The deed records with the Travis County Clerk through the title company, and taxes are billed in arrears and prorated to your closing date.
Austin is the market where sellers most often need to think about the difference between property tax and income tax. Property taxes are settled at closing and that is the end of it. Capital gains on a long-held house that has appreciated substantially is a separate matter between you and the IRS, and it is genuinely worth a conversation with a CPA before you sell rather than after. We are not qualified to advise on it and will not pretend to be, but we would rather you had that conversation early.
If you are over 65 and have been using a tax ceiling or a deferral, ask the title company how it unwinds at closing. Deferred taxes accrue and are settled from the proceeds, which is fine, but it should not be a surprise on the settlement statement.
