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Texas Homestead Exemption

Posted by Richard Soto on Friday, March 2nd, 2018 at 3:15pm.

A house is probably one of the biggest investment the average Texan will ever make. To make such an investment a reality, the state of Texas offers its citizens a simple way to save money on their property taxes through a homestead exemption. Eligible Texas homeowners can reduce the taxes owed on their property by a certain percentage, by filing a homestead exemption. If you wish to know how to go about it, the guide below will help you learn more about Texas Homestead Exemptions.

What is a Homestead Exemption?

A homestead exemption removes a part of the value of your house from taxation and lowers the amount of your property taxes. To qualify you must fulfill the following:

· Be the owner

· Must be your primary residence in January when the US assesses annual property taxes.

The amount of the exemption depends on state and country laws. For example, if your property is valued at $45,000, and you qualify for a $15,000 exemption, you will pay taxes on the home as it’s worth $30,000. This exemption only applies to your primary residence.

Exemption Requirements

Here are some of the requirements you must fulfill to qualify for a homestead exemption:

1. You must be the homeowner and it must be your primary residence. You must own your home as at January 1, to qualify for a general exemption. You are exempted from owning your home by Jan 1 if you are 65 years of age or older or disabled. You can apply for the homestead exemption as soon as you qualify. You will receive the exemption as of the previous January 1.

2. So long as you’re the owner, your homestead can be a detached structure, condo or a mobile home located on leased land. For ranch owners, your homestead can include up to 20 acres if you use the land as your yard. You can also own property through the interest in a qualifying favorable trust, and occupy as a trustee of a qualifying trust.

3. To qualify for an exemption, you must use the home as your primary residence on January 1. If you have several properties, you can only get an exemption for your main residence.

4. You can still get an exemption if you move away temporarily from your home. This is on condition you return and don’t set up another primary residence. For example, if you enter a nursing home, your home still qualifies as your homestead if you plan on returning. Renting part of it or using a section of the home for business will disqualify the rest of the home from exemption.

Types of Exemptions

There are several types of exemptions. They include:

· School taxes – Residence homestead owners receive a grant of $25,000 homestead exemption from their home’s value for school taxes.

· County taxes – A county that collects a special tax for farm-to-market roads or flood control, will allow a residence homestead to receive a $3,000 exemption for this tax. If the county offers an optional exemption for homeowners 65 years and above, the owners will only receive the local-option exemption.

· 65 years plus and disabled exemptions – Besides the $25,000 exemption for all homeowners, individuals that are 65 years and above or disabled homestead owners qualify for a $10,000 homestead exemption for school taxes. If you qualify for both - $10,000 exemption for 65 years plus, and exemption for disabled homeowners – you must choose one. You cannot be a recipient of both exemptions.

· Optional percentage exemptions – A taxing entity such as a city, county, school, or special district, may offer an exemption of up to 20% of the home’s appraisal. No matter the percentage, the amount of an optional exemption cannot be less than $5,000. Each taxing entity will decide if to offer the exemption and at what percentage. Such a percentage exemption will be added to any other home exemption for which the owner qualifies. To offer this exemption, the taxing entity must decide before July 1 of the tax year.

· Optional age 65 or older or disabled exemptions – A taxing entity can offer an extra exemption amount of at least $3,000 for taxpayers 65 years plus and/or disabled.

Beware of Homestead Exemption Scams

Applying for a homestead exemption is free! But certain companies offer to process your application for a fee, notifying homeowners via mail. Such letters are usually disguised as an official government document, claiming a fee must be paid for the homeowner to receive the exemption. If you come across them, don’t hesitate to discard them! Although Texas laws require such companies to confirm to homeowners that they’re not a government agency, many people can’t tell the difference and end up paying such fees.

Once you receive an exemption, you will not have to reapply again unless the chief appraiser sends you a new application. If that happens, you must file the new application. In case you move houses or your qualification ends, you must inform the appraisal district in writing before the next May 1. Also look out for an exemption from the previous owner. A homestead exemption will carry over to the year you move in if the previous homeowner had filed for a homestead exemption. This will cover your property tax deduction for that year on that home.

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