Property taxes can be a substantial expense for Texas homeowners. For seniors, retirees, and homeowners living on a fixed income, keeping up with property tax payments can be especially challenging. While homestead exemptions can help alleviate that burden, homeowners who are 65 or older or disabled may also qualify for a tax deferral, allowing them to take advantage of both options.
A homestead exemption reduces the taxable value of a qualifying home, which can lower the amount of property taxes owed. A tax deferral works differently by allowing eligible homeowners to postpone paying certain property taxes on their residential homestead.
In a nutshell, a property tax deferral can give you more time to pay taxes, but it doesn’t eliminate the taxes owed. The deferred amount remains a debt against the property and accrues interest while the deferral is in effect.
Understanding how the deferral works, who qualifies, and when the taxes eventually become due can help older homeowners and retirees decide whether it is an option worth considering.
Who Qualifies for a Tax Deferral?
Texas homeowners may qualify for a property tax deferral if they are 65 or older or disabled and the property is their homestead. To receive the deferral, homeowners must file a tax deferral affidavit with their county appraisal district.
How Does the Deferral Work?
After filing the affidavit, the deferral can continue as long as the homeowner owns and continues to live in the home as their primary residence. The taxes are not canceled but postponed until the homeowner, or a qualifying surviving spouse, no longer owns or lives in the home.
Deferred taxes accrue interest at a rate of 5% per year. However, new penalties do not accrue during the deferral period. Any penalties or interest that were already owed before the deferral began remain due.
Do Deferred Property Taxes Have to Be Paid Back?
According to the Texas Comptroller, the deferred taxes and interest become due 181 days after the tax collector delivers a notice of delinquency.
A qualifying surviving spouse could continue the deferral after the homeowner’s death if certain requirements are met, including being at least 55 years old at the time of the homeowner’s death.
How-Much-Interest-Accrues-on-Deferred-Taxes?
Deferred property taxes accrue interest at a rate of 5% per year. This interest continues to accrue for as long as the taxes remain deferred, increasing the total amount that will eventually need to be paid.
For example, $10,000 in deferred taxes would accrue $500 in interest over one year, assuming the full $10,000 remained deferred for the entire year.
How to Apply for a Texas Property Tax Deferral
Homeowners who qualify must complete Form 50-126 (Tax Deferral Affidavit for Age 65 or Older or Disabled Homeowner) and file it with the appraisal district in the county where the property is located, such as the Harris County Appraisal District (HCAD) for Houston-area homeowners.
The form is available through the Texas Comptroller’s website or the local appraisal district. The affidavit must be signed and notarized before it is filed with the appraisal district.
Tax Deferral vs. Four-Installment Payment
Instead of paying their current property tax bill in one lump sum, eligible homeowners may have the option to pay it in four installments. This can be an alternative for seniors who are able to pay their property taxes but want to divide the cost into smaller payments. This doesn’t postpone the taxes owed like a tax deferral; it simply allows homeowners to spread their current property-tax payments throughout the year.
Get Help With Your Property Taxes
Figuring out Texas property tax rules can be stressful, especially when exemptions, deferrals, and payment options are involved. O’Connor helps Texas homeowners navigate the property tax process and identify opportunities to reduce their property tax burden. Even if you don’t qualify for a tax deferral, O’Connor can help protect your home and your wallet through various kinds of property tax reduction.
We at O’Connor offer support with filing exemptions, offering homestead assistance for free. In addition, we can file property tax appeals annually, ensuring that you are only paying your fair share. We can also send out our concierge services directly to your door, and one of our representatives can walk you through the process while spotting any issues with your home that could lead to reduced taxes. There is no cost to enroll, and you will only pay if we can lower your taxes.
Frequently Asked Questions About Texas Tax Deferrals
Q: Who qualifies for a Texas property tax deferral?
A: Homeowners who are 65 or older or disabled may qualify if the property is their residence homestead.
Q: When do deferred property taxes have to be paid?
A: Deferred taxes and interest become due 181 days after the tax collector delivers a notice of delinquency, after the homeowner or qualifying surviving spouse no longer owns or lives in the home.
Q: How much interest accrues on deferred property taxes?
A: Deferred property taxes accrue interest at a rate of 5% per year while they remain deferred.
Q: What’s the difference between a tax deferral and the four-installment payment option?
A: A tax deferral postpones the payment of certain property taxes, while the four-installment option allows eligible homeowners to pay their current property tax bill in four payments.
