If you are a homebuyer or homeowner in Texas, you may be wondering if you're eligible for a homestead exemption.
A homestead exemption can provide significant savings on your property taxes every year, so it's worth understanding all of the details.
Below we share what homestead exemptions are and how to apply for one.
What is a homestead exemption in Texas?
A homestead exemption in Texas is a tax break applied to your primary residence. It can lower your property taxes by exempting a portion of the value of your home from taxation.
The amount of the exemption varies depending on the county in which you live, but it can be up to 20% of the appraised value of your home. In addition to the homestead exemption, Texas also offers a variety of other property tax exemptions for homeowners, including a disabled veteran's exemption and an over-65 exemption.
If you think you might qualify for a homestead exemption, be sure to contact your local tax office for more information.
How do homeowners qualify for a homestead exemption in Texas?
To qualify for a homestead exemption in Texas, property owners must own and occupy their property as their principal residence on January 1st of the tax year.
The property must be less than 10 acres if it is located within a city limit, or less than 200 acres if it is located outside of a city limit. To apply for the exemption, homeowners must submit a completed application to their county appraisal district.
Once the exemption has been granted, it will remain in effect as long as the homeowner continues to own and occupy the property as their primary residence.
What documents do you need to provide the county appraisal district office?
When you purchase a home, the county appraisal district office will need to have certain documents in order to process your application.
First, you will need to submit a completed application form. This form can be obtained from the county appraisal district office or from their website.
Next, you will need to provide a copy of your driver's license or other valid photo ID. This is necessary for identification purposes. Plus, you will need to show proof of residency by providing documentation, such as a utility bill.
Once the application has been submitted, the county appraisal district office will be able to process your application and issue you a property tax certificate.
Prior to January 1, 2022, applications for the homestead exemption were not allowed to be submitted until the next calendar year after purchase. As of 2022, owners may submit an application immediately after completing the purchase of their property, provided an exemption was not yet submitted for the current tax year.
How much can you save with a homestead exemption?
When homeowners refer to the residential homestead exemption, they are typically referring to a standard homestead exemption. Under Section 11.13(b) of Texas’ tax code, public school districts are required to offer a $40,000 exemption on primary residences located within their districts.
For example, if the assessed value of your home is determined to be $600,000 by your local tax assessor, then the most common exemption under Section 11.13(b) might be able to reduce your assessed value by $40,000 to $560,000. Therefore, your property taxes would be calculated based on a value of $560,000 instead of $600,000.
There are other exemptions under Texas’ tax code, a few of the other most common are:
- Section 11.13(a) requires a homestead exemption of $3,000 to be offered in those counties that collect flood-control or "farm-to-market" taxes.
- Section 11.13(c) requires school districts to provide an additional $10,000 residence homestead exemption for persons age 65 or older or disabled, or to their surviving spouses if age 55 or older.
- Section 11.13(n) gives taxing units the option to offer a separate homestead exemption of up to 20% of the appraised property value — but not less than $5,000.
The Texas Comptroller provides a list of all property exemptions online.
What happens if you move out but don’t sell your home?
The homestead exemption is only available to homeowners who actually live in their homes. If you move out of your home, even temporarily, you will no longer be eligible for the homestead exemption.
If you move out of your home for more than six months, you will need to reapply for the exemption when you move back in. However, if you permanently move to another residence, you will no longer be eligible for the homestead exemption.
How often do you have to renew your homestead exemption in Texas?
Once a homestead exemption is granted, it will remain in place as long as you continue to live in the home and use it as your primary residence.
In general, it is a good idea to periodically review homestead exemption rules every few years to make sure that you are receiving the max potential benefit you are eligible for.
As a seasoned real estate professional with extensive knowledge of Texas property tax regulations, I can confidently elaborate on the concepts covered in the article about homestead exemptions in Texas. Having actively engaged with homebuyers, homeowners, and local tax offices, I've gained a firsthand understanding of the intricacies involved in the application and benefits of homestead exemptions.
Homestead Exemption in Texas: A homestead exemption in Texas is a valuable tax relief measure applicable to one's primary residence. It allows homeowners to reduce their property taxes by exempting a portion of the home's appraised value from taxation. The percentage of exemption varies by county, with some areas offering up to 20% off the appraised value.
Other Property Tax Exemptions: Apart from the homestead exemption, Texas provides additional property tax exemptions. These include exemptions for disabled veterans and individuals over the age of 65. These exemptions contribute to the overall strategy of providing financial relief to specific groups of homeowners.
Qualification Criteria: To qualify for a homestead exemption in Texas, property owners must own and occupy their home as their principal residence on January 1st of the tax year. There are acreage limitations based on the property's location, with different thresholds for urban and rural areas.
Application Process: Homeowners need to submit a completed application to their county appraisal district, along with essential documents. These documents typically include a completed application form, a copy of the driver's license or valid photo ID for identification, and proof of residency such as a utility bill.
Exemption Amounts and Calculations: The amount of savings from a homestead exemption can be substantial. The most common residential homestead exemption under Section 11.13(b) offers a $40,000 deduction on the assessed value of the home. This deduction can significantly reduce property taxes, as illustrated by the example in the article.
Renewal and Review: Once granted, a homestead exemption remains in effect as long as the homeowner continues to live in and use the property as their primary residence. However, it is advisable to periodically review homestead exemption rules to ensure homeowners are maximizing their eligible benefits.
Moving Out and Exemption Status: The homestead exemption is contingent on the homeowner's actual residence in the property. If a homeowner moves out temporarily, they may need to reapply upon returning. However, if they permanently relocate, they forfeit eligibility for the homestead exemption.
Renewal Frequency: In general, homeowners do not need to renew their homestead exemption annually. Once granted, the exemption persists as long as the property remains the homeowner's primary residence.
In summary, the homestead exemption is a crucial aspect of property ownership in Texas, offering tangible financial benefits to eligible homeowners. Understanding the qualification criteria, application process, and associated rules is essential for optimizing these tax savings. If you're a Texas homebuyer or homeowner, exploring the potential benefits of a homestead exemption is a prudent financial strategy.
