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All about the Texas homestead tax exemption

The tax season may not be the favorite time of the year but did you know that there are benefits if a homeowner purchased a residential property in the previous year? The benefit that recent property purchases get is called the homestead exemption. This helps homeowners lower their property taxes.

Starting from January 1st to April 30th, homeowners have the opportunity to submit the residence homestead exemption application. Continue reading to know all about homestead exemptions, get answers to all your queries on homestead exemption, and also find all the resources you need. Let’s begin with understanding what is a homestead tax exemption?

Understanding Homestead Tax Exemption

If higher property tax rates are bothering you, then you can opt to claim for a homestead exemption on your primary residence as long as you live in it. Your residence can either be a house, a condominium, or a manufactured home either on the land you own or lease land. 

How does homestead exemption work?

A certain amount from your home’s value is deducted from taxation when you apply for a homestead exemption. Let’s understand it better with an example. Say the appraisal district has valued your property for $400,000 and if you qualify for a $30,000 exemption then you will be required to pay taxes as if your house was worth only $370,000.

texas homestead exemption

Do you qualify for a homestead exemption?

Living in Texas, to qualify for a homestead exemption here are a few criteria you have to meet:

  • You must be using your house as the principal residence as of January 1st of the tax year
  • You must be an individual who owns the house and not a corporation or a business entity and
  • Most importantly you must have not claimed a homestead exemption for any other property during the same tax year.

The different types of homestead exemptions

There are many different types of homestead exemptions and they vary by location. Few exemptions are made mandatory all over a state whereas others are not i.e. the county or the city has the right to decide. However, a few common exemptions are explained below.

  • School taxes

Resident homeowners can claim a $25,000 homestead exemption calculated on their home’s value.

  • County taxes

In case of special taxes(say, flood control) collected you can receive a $3,000 exemption on county taxes.

  • Over 65 & disabled exemption

You qualify for a $10,000 exemption on school taxes in addition to the first one.

  • Optional percentage exemption

Taxing units decide this & might offer up to 20% of the home’s value. This cannot be less than $5,000 & is added along with any other exemption you qualify.

  • Optional – 65 or older or disabled exemption

Taxing units offer an additional $3,000 for taxpayers 65 or older or disabled

Applying for a homestead exemption

Most people are in the thought that applying for a homestead exemption is difficult but it is a simple two-step process and it is even easier if you are familiar with the deadlines. All you have to do is

  • visit your county’s website 
  • download the application, fill in the form
  • attach the required documents
  • mail it to your county appraisal district

The documents required are a copy of your driving license or ID proof that has the same address as that of your homestead along with the application form. In the case of a manufactured home, it is different. You will be required to submit one among these:

  • statement of ownership issued by the Texas Department of Housing and Community Affairs or
  • copy of the sales purchase agreement or 
  • payment receipt or
  • an affidavit that depicts you are the owner of the house.

Get to know the deadlines

The applications should be sent between January 1st to April 30th. The applications are not accepted before January 1st and if you miss the deadlines you have time up to one year to apply after you pay your taxes.

For age 65, older or disabled exemption you must apply one year before from the date you turned 65 or became disabled. If you miss it then you can apply next year.

Get complete information on the Texas property tax exemptions or get answers to all your queries on exemptions.

 

Blog Author

Patrick O’Connor, MAI, Owner and President
Patrick O’Connor has been active in reducing property taxes, providing expert witness testimony and appraising commercial real estate property since 1983. Pat is active in publishing analyses and data with respect to the real estate market, while being a highly regarded media spokesperson for the real estate community. He holds a MAI, the highest achievable designation from the Appraisal Institute, and is a licensed senior property tax consultant. Pat earned a Master of Business Administration from Harvard University. In 2001, he authored the first definitive consumer guide to Texas property taxes, Cut Your Texas Property Taxes.

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