Homestead Exemptions Simplified
Did you know you can decrease the amount of property tax you pay? Yes, it's true! Though you will need to claim a Homestead Exemption, meaning file some paperwork to make it happen, but it's not that difficult.
Let's dig in, but we'll start with the basics. First of all, what's a Homestead? A Homestead is your primary residence. Protection of a homestead is a big deal historically and laws on this topic are found in the statutes or constitutions in 42 of the 50 states, including Texas. Okay, got that? So, the word exemption just means released from obligation, or in simpler terms, to get out of it. We'd all like to get out of paying taxes, right? Fortunately, our lawmakers felt the same way and decided there needed to be laws that protected a property owner from losing their home in tough times, but also would protect their spouse if something happened to the main breadwinner.
Homestead protection laws and property tax exemption are actually two different things that often get confused, especially because folks tend to use the terms interchangeably. Homestead protection laws are the bigger picture item and are in place to protect against forced sale of a home due to creditor demands and to provide a surviving spouse with shelter. Homestead property tax exemptions are available in most states to help achieve that protection.
So, how does exemption work? It's pretty straightforward. An exemption removes part of the value of your property from taxation and lowers your taxes. For example, if your home is valued at $100,000 and you qualify for a $20,000 exemption, you pay taxes on your home as if it was worth only $80,000. You must reside at the property on January 1 of the taxable year and the property must be your primary residence. Once you receive the exemption, you don't need to re-apply each year, unless your statement gets returned to the appraisal district, which they'll assume means you no longer live there. Also, in Texas you can claim the exemption on other property types besides a single family home, such as a condo or mobile home, as long as they are your primary residence.
Texas law requires school districts to offer a $25,000 exemption on residence homesteads. Any taxing unit, including a city, county, school district or special district, has the option of deciding locally to offer a separate residence homestead exemption of up to 20 percent of a property’s appraised value, but not less than $5,000.
The exemption is for individuals only, not corporations, partnerships, or LLCs. There are also exemptions available for those over 65, disabled, and other groups. For example, Texas law requires school districts to offer an additional $10,000 residence homestead exemption to persons age 65 or older or disabled. Any taxing unit, including a city, county, school district or special district, has the option of deciding locally to offer a separate residence homestead exemption for persons age 65 or older or disabled in an amount not less than $3,000. To qualify for the mandatory and local option exemption for persons age 65 or older, the owner must be age 65 or older and live in the house. If the age 65 or older homeowner dies, the surviving spouse may continue to receive the local option exemption if the surviving spouse is age 55 or older at the time of death and lives in and owns the home and applies for the exemption. This is pretty much word for word from the Texas Comptroller's website, so I recommend you visit the link at the bottom if you'd like to learn more.
Texas Comptroller Information on Property Tax and Exemptions: https://comptroller.texas.gov/taxes/property-tax/docs/96-1740.pdf
And, if you're ready to actually apply for your exemption, you can visit www.hcad.org or download HCAD's app on your smart phone. You can file for your exemption while you're sitting in traffic (but don't text and drive!)
Of course, if you don't live in Harris County, you'll want to visit your own county's appraisal district website.
And for disclaimer purposes, information in this blog is shared with the intent of general informational and educational purposes only. Laws change. You could be reading this five years from when I wrote it. Consult a legal and/or tax advisor before taking action. For the record, I am neither an attorney nor a tax professional. However, I'm a great realtor, so I could help you there. Drop me a note at firstname.lastname@example.org