Last updated: June 2026 — reflects current market data and tax rates.
If you own a home in California and have been watching Texas real estate prices, the math seems straightforward. Sell your $1.2 million place, buy a comparable home for $500,000 in Boerne, and pocket the difference. The reality is more complicated — and more interesting — than that headline suggests.
The gap between what you sell for and what you actually keep is shaped by transaction costs on both sides, capital gains taxes, closing fees, and a monthly budget that looks nothing like what you are paying now. This article walks through three real scenarios — Bay Area, Los Angeles, and Sacramento — with actual numbers, so you can see exactly where the money goes and where the wealth shows up.
Three Real Scenarios: What the Numbers Actually Look Like
We modeled three common California selling situations against two Texas buying markets. Median home prices are drawn from 2025 Redfin and Zillow data [1][2]. All figures assume a married couple selling a primary residence they have owned for at least two years, qualifying for the full $500,000 federal capital gains exclusion under IRC §121 [3].
Scenario 1: Bay Area (San Jose) → Boerne
$1,500,000 → $500,000Selling in California
Buying in Texas
Cash left over after funding the Texas down payment and closing costs.
Scenario 2: Los Angeles → Boerne
$1,100,000 → $485,000Selling in California
Buying in Texas
Cash left over after funding the Texas down payment and closing costs.
Scenario 3: Sacramento → San Antonio
$650,000 → $300,000Selling in California
Buying in Texas
Cash left over after funding the Texas down payment and closing costs.
The Pattern Across All Three Scenarios
Even after transaction costs and taxes, the Bay Area seller unlocks over $700,000 in freed equity. The LA seller frees up nearly $500,000. The Sacramento seller — starting with less equity — still walks away with roughly $200,000 in liquid capital after funding a comparable Texas purchase outright. In every case, the Texas home costs 50–70% less than the California home, and the monthly carrying cost drops dramatically.
Where the Money Goes: California Seller-Side Costs
Selling a home in California involves costs that often surprise first-time sellers — especially those who have owned for a long time and may not have tracked how the transaction landscape has changed [4][7].
Agent Commissions
The typical total commission in California runs 4.5–5.5%, split between the listing agent and the buyer's agent. On a $1.5 million sale, that is $67,500 to $82,500. Post-NAR settlement changes in 2024 have made buyer-agent compensation more negotiable, but the total cost to the seller remains in this range for most transactions [5].
Transfer Taxes and Documentary Fees
California charges a county documentary transfer tax of $1.10 per $1,000 of sale price, plus many cities add their own local transfer tax. San Francisco charges an additional $6.80 per $1,000 (totaling $7.90). Los Angeles charges $4.50 per $1,000. On a $1.1 million Los Angeles sale, the transfer tax alone is nearly $5,000 before any city supplements [7].
Seller Closing Costs
Beyond commissions and transfer taxes, sellers typically pay for the owner's title policy (in some counties), prorated property taxes, HOA document preparation, and any outstanding repair credits. These usually add up to roughly 1% of the sale price.
Capital Gains: The Part Most People Do Not Plan For
If you have owned and lived in your California home for at least two of the last five years, the Section 121 exclusion lets married couples exclude up to $500,000 in capital gains from federal and California state tax [3][4]. For a Bay Area homeowner who bought for $700,000 and sells for $1.5 million, the gain is roughly $800,000. After the exclusion, approximately $300,000 is taxable — and that is where the rates stack up:
Capital Gains Tax Breakdown: $300,000 Taxable Gain (Bay Area Example)
Federal rate is 15% for taxable income between $98,901–$613,700 (married filing jointly, 2026). California taxes capital gains as ordinary income at rates from 1% to 13.3% [3][4]. NIIT applies when modified AGI exceeds $250,000. This example assumes the $300,000 gain is the primary additional income above the standard exclusion threshold.
California conforms to the federal Section 121 exclusion, so the same $500,000 exclusion applies at the state level [4]. However, gains above the exclusion are taxed at the combined federal, state, and NIIT rate — which can exceed 28% in total. This is the cost most California sellers underestimate when they project their net proceeds.
One important nuance: if you have rented out your home for any period, or used it as a second home, the exclusion may be reduced proportionally. And if you sell before establishing a new domicile elsewhere, California may still claim taxing rights on the gain [4].
The Monthly Budget: Where the Ongoing Wealth Accumulates
The equity unlocked at closing is a one-time event. The monthly cost difference is where wealth compounds over time. Here is what your housing budget looks like in each scenario, assuming a 20% down payment, a 30-year fixed mortgage at 6.8%, and current effective property tax rates [5][6].
Bay Area (San Jose) → Boerne
California Monthly
$11,452/mo
Texas Monthly
$3,883/mo
Annualized: $90,840/year freed for savings, investment, or lifestyle.
Los Angeles → Boerne
California Monthly
$8,949/mo
Texas Monthly
$3,778/mo
Annualized: $62,052/year freed for savings, investment, or lifestyle.
Sacramento → San Antonio
California Monthly
$6,134/mo
Texas Monthly
$2,490/mo
Annualized: $43,728/year freed for savings, investment, or lifestyle.
The monthly savings numbers are striking. A Bay Area family moving to Boerne frees up over $6,400 per month — not by downgrading their lifestyle, but by purchasing a comparable home in a lower-cost market and eliminating California state income tax entirely. Texas has no personal income tax [6]. That $6,400 monthly difference, invested at a conservative 7% return, compounds to roughly $1.1 million in ten years.
But Wait — Texas Property Taxes Are Higher
Yes, and the numbers above account for that. Texas effective property tax rates average 1.8–2.3% depending on county and school district [5][6]. California's effective rate averages 0.7–1.2% thanks to Prop 13's assessment caps. On a $500,000 Texas home, you are paying roughly $9,000–$11,500 per year in property tax — more than you would on a similarly valued California home. But you are comparing a $500,000 Texas home to a $1.1–1.5 million California home, and the absolute dollar amount of property tax in Texas is still far lower. The homestead exemption ($140,000 base, with an additional $60,000 for over-65 homeowners) further reduces the Texas tax bill [6]. Full details are in our Texas Homestead Exemption guide.
The True Cost of the Move: What Most People Forget
Beyond the big-ticket items above, the actual logistics of a cross-state relocation carry their own costs. Budget for:
- Moving company: A full-service long-distance move from California to Texas typically runs $4,000–$10,000+ depending on home size and service level.
- Temporary housing: If your Texas purchase and California sale do not close on the same day, you may need 1–3 months of temporary housing or short-term rental in Texas. Budget $2,000–$4,000/month.
- Vehicle registration and Texas inspection: Texas requires a safety inspection and new vehicle registration. Budget $100–$300 per vehicle.
- Driver's license: Texas DPS charges $33 for a new license. You must transfer within 90 days of establishing residency.
- Utility deposits: Electric, water, gas, and internet deposits for a new address typically total $300–$800.
- Homestead exemption filing: Free. File with your county Appraisal District as soon as you close and move in. See our complete Homestead Exemption guide for deadlines and county filing links.
For most relocating families, these ancillary costs total $7,000–$18,000 — a rounding error against the six-figure equity unlock, but worth budgeting for so there are no surprises.
The 10-Year Wealth Projection
The one-time equity unlock is meaningful. The sustained monthly savings are transformative. Here is what the combined wealth effect looks like over a decade for the Bay Area → Boerne scenario — the most common migration pattern we see.
Bay Area → Boerne: 10-Year Wealth Effect
Equity unlocked at closing: $1,230,177 in liquid capital after funding the Texas purchase.
Monthly savings: $7,570/month ($6,419/mo) — from lower mortgage, no state income tax, and reduced insurance costs.
Annual savings: $90,840/year available for retirement contributions, college savings, emergency fund, or investment.
10-year compounding (7% return): $971,988+ in accumulated savings — on top of the initial equity unlock.
Texas home equity growth: The Boerne market has appreciated 11–15% annually in recent years. On a $500,000 purchase, even moderate 5% annual growth adds ~$325,000 in home equity over 10 years.
Combined 10-year wealth effect: $1,230,177 initial + ~$1M+ accumulated savings + ~$325K home equity growth
These projections use conservative assumptions. They do not account for salary increases, additional investment returns on the initial equity unlock, or the compounding benefit of investing the lump sum upfront. The core point is simple: the wealth transfer from a California sale to a Texas purchase is not just about buying a cheaper house. It is about redirecting a significant portion of your income from housing costs to wealth-building.
What Makes This Different From Just "Moving Somewhere Cheaper"
There are plenty of places in the United States where housing is cheaper than California. The reason California-to-Texas relocation is the dominant migration pattern — and has been for over a decade — is that Texas offers a specific combination that cheaper markets do not:
- No state income tax — unlike Nevada, Florida, or Washington, Texas also has a robust and diversified economy anchored by healthcare, military, technology, energy, and financial services [6].
- Strong job market in the region — San Antonio alone is home to the South Texas Medical Center, Joint Base San Antonio (the largest Joint Base in the DoD), USAA, Frost Bank, and a growing cybersecurity corridor along the I-35/1604 interchange.
- Affordable luxury — the Hill Country (Boerne, Fair Oaks Ranch, Comfort, Pipe Creek) delivers the lifestyle that $1.5 million barely buys in the Bay Area: acreage, views, privacy, and new construction at a fraction of the cost.
- Direct relocation infrastructure — through our network of over 1,000 California real estate agents, we coordinate simultaneous closings so you do not have to bridge two mortgages or live in a hotel between transactions.
The wealth transfer is real. But the lifestyle transfer is equally important — and it is one of the things that separates a well-planned relocation from a panicked escape.
Frequently Asked Questions
These are the questions I hear most from California sellers looking at the Hill Country. Every situation is different, but the patterns are consistent.
How much equity do I actually keep after selling in California?
After agent commissions (typically 5%), closing costs, transfer taxes, and any capital gains taxes, a California seller typically retains 85–92% of the sale price, depending on the original purchase price and how long you owned the home. The Section 121 exclusion ($500,000 for married couples) eliminates or reduces capital gains tax on a primary residence, which is the single biggest factor in how much you walk away with.
Do I have to pay California capital gains tax if I move to Texas before selling?
California may still owe taxes if you sell within 18 months of changing your domicile. The state uses a safe-harbor rule: if you sell your California home more than 18 months after establishing a new domicile, you generally avoid California state tax on the gain. If you sell before that, California may claim the income. Consult a CPA who handles cross-state relocations — this is one of the most commonly misunderstood areas of the move.
What does my monthly budget look like in Texas vs. California?
Across the three scenarios in this article, monthly housing costs (mortgage, property tax, insurance) drop by $3,400 to $6,400 when moving from California to the Hill Country. Eliminating California state income tax adds another $1,800+ per month in take-home pay for a typical dual-income household. The combined effect is often $5,000–$8,000 per month in freed cash flow.
Is it better to buy in Texas before selling in California?
That depends on your liquidity and risk tolerance. If you have enough cash reserves for a down payment without selling first, buying first eliminates timing pressure and lets you negotiate without a contingency. If not, a bridge loan or a coordinated simultaneous close (which is Bill's specialty — he works with over 1,000 California agents to synchronize both transactions) can bridge the gap. Each approach has tradeoffs covered in detail in our guide to coordinating a California sale and Texas purchase.
Can I use a 1031 exchange to defer taxes when relocating from California to Texas?
Yes, a 1031 exchange works across state lines, but it has strict timelines and rules. You must identify a replacement property within 45 days and close within 180 days. California also requires you to continue reporting the deferred gain through Form 3840 even after you leave the state. A 1031 exchange only applies to investment or business-use property — not a primary residence. For primary residence sales, the Section 121 exclusion is usually more beneficial.
The Math Favors the Move. The Question Is Timing.
Every California homeowner's situation is unique — your purchase price, your capital gains exposure, your desired Texas community, and your timeline all shape the numbers. What does not change is the structural advantage: selling California equity and buying in the Texas Hill Country converts housing-cost burden into liquid wealth and monthly cash flow.
If you want to run the specific numbers for your situation — what your California home would net, what your Texas purchase would cost, and what your monthly budget would look like — I am happy to walk through it. A twenty-minute conversation with actual data for your price point and timeline is worth more than any general article.
Written by
Bill Ross
Hill Country Homesteads Group, brokered by KW Boerne
Bill Ross is a Texas real estate agent with nearly four decades in high-tech sales and a network of 1,000+ California real estate agents for coordinated cross-state transactions. Recognized in USA Today and The Washington Post for his relocation expertise.
Related Guides
Sources
- Median home prices — Bay Area, Los Angeles, Sacramento — Redfin, Zillow, SoFi housing market data (2025–2026). www.redfin.com
- Median home prices — Boerne and San Antonio — Redfin, Movoto housing market data (2025–2026). www.redfin.com/city/2371/TX/Boerne/housing-market
- Federal capital gains tax rates and Section 121 exclusion — Internal Revenue Service; NerdWallet (2026). www.nerdwallet.com/taxes/learn/capital-gains-tax-rates
- California state income and capital gains tax rates (1%–13.3%) — California Franchise Tax Board. ftb.ca.gov/file/personal/tax-rates.html
- Kendall County and Bexar County property tax rates — Kendall County Appraisal District; Bexar County Tax Assessor-Collector. www.co.kendall.tx.us/306/Kendall-County
- Texas homestead exemption ($140,000 base, Prop 4 / Prop 13) — Texas Comptroller of Public Accounts. comptroller.texas.gov/taxes/property-tax/exemptions/
- California transfer tax rates — California Revenue and Taxation Code §11911. leginfo.legislature.ca.gov/
- 1031 exchange rules and cross-state applicability — Internal Revenue Code §1031; IRS Publication 544. www.irs.gov/newsroom/like-kind-exchanges-real-estate-tax-tips
Last reviewed: June 2026. Market data reflects 2025–2026 published figures. Individual results vary based on property specifics, tax situation, and market conditions at the time of sale.