Texas over-65 property tax exemption both freezes school property taxes and likely reduces taxes due to other tax entities (city, county and miscellaneous). The most powerful aspect of the over-65 tax exemption is the freeze on school property taxes. School property taxes NEVER increase, unless: 1) the home is enlarged or improved with a remodeling. (Remodeling does not include major maintenance such as roof replacement or HVAC replacement.) The exemption for city and county property taxes are also often much higher. For example, the City of Houston over-65 property tax exemption was raised to $260,000 in June 2022.
The disability exemption is available to those legally disabled and has the same effect as the over-65 exemption. A home owner can obtain either the over-65 or the disability exemption but not both. A married couple can obtain one homestead exemption.
What is the property tax exemption for over 65?
Homeowners aged 65 years or older qualify for this exemption. All homeowners aged 65 years or older qualify for a standard $25,000 homestead exemption. Other than this, the Texas school districts offer a $10,000 exemption for qualifying homeowners aged over 65. An additional exemption of $3,000 is offered by many cities and counties as well. Get to know about the additional exemptions by contacting the appraisal district.
When do I qualify?
You qualify for this exemption on the day you turn 65. To claim for this exemption all you have to do is submit proof of your age. This can be either a copy of your driving license or your birth certificate. In situations where the 65 or older homeowner dies, the surviving spouse continues to receive the exemption. However, the spouse has to be 55 years or older, must live in the house, own it, and apply for the exemption. In the case of a disabled person who is 65 or older, he/she can receive both the exemptions during the same year, but the taxing units must differ.
Applying for the additional $10,000 exemption
You have up to one year’s time after you turn 65 to apply to your appraisal district. Once your application is approved by the appraisal district you will receive the exemption for the entire year you turned 65. Ever since 2005, if your DOB is mentioned on the original homestead application form or any other written document submitted to the appraisal district about your homestead, you will automatically receive this exemption without applying. But you must be entitled to a general homestead exemption.
Types of exemptions
There are different types of exemptions available to people who are aged 65 or older. These include:
School district taxes
Homeowners are allowed a $25,000 exemption from the value of their home for school district taxes.
In situations where the county appraisal districts collect tax for flood control, etc, homeowners are allowed $3,000 as an exemption on the county taxes. In cases of an optional exemption, homeowners will receive only a local option exemption.
Age 65 & disabled exemption
Homeowners qualify for a $10,000 homestead exemption in addition to the $25,000 for school districts. In cases where the owner qualifies for both age 65 and disabled exemption, the homeowner can choose only one among the two for the school district taxes. Both the exemptions cannot be received.
Optional percentage exemption
The taxing units decide if the exemption can be offered and the percentage at which it can be offered. However, this has to be decided prior to July 1st of the tax year. The exemption cannot be less than $5,000, it can be up to 20% of the residence homestead value.
Optional age 65 or older or disabled exemptions
As per this exemption, the taxing units have the option to offer an extra homestead exemption of at least $3,000 for those aged 65 or older.
Benefits of qualifying for an over 65 property tax exemption
For those who qualify for the over 65 exemption, there is something called the property tax ceiling. This automatically limits the school taxes to the amount you paid in the year you qualified for an over 65 property tax exemption. If your county, city, or junior college adopts the tax ceiling they might limit the taxes for an over 65 exemption. In situations where there are improvements made to the home, the tax ceiling increases. If there are no improvements made the school taxes might go down the tax ceiling but not above.
Apart from this, if you purchase or shift to a different residence in Texas, you have the option to transfer the percentage of the school taxes you paid. This will be based on the previous home’s school tax ceiling and is termed Ceiling Transfer. For this, you will have to relocate only within the same taxing unit. If the new house is in a different district, a certificate from the appraisal district for the previous home is required and it has to be taken to the appraisal district where the new house is located.
No one will enjoy paying a lot of property taxes. Having a little knowledge about the exemptions will help you save money every year. Read more on how Texas seniors can limit the impact of property taxes.