Time to File! Homestead Exemption Title Tip
January may be a cold and dark month across most of the country, but in Texas, it’s not all bad! Come January 1st, you are eligible to file a Homestead Tax Exemption on your primary residence, which removes part of the property’s value from taxation resulting in a lower tax bill for you at the end of the year!
What is homestead?
How do you know if your property is considered homestead? Homestead property can be a separate structure, condominium, or manufactured home located on owned or leased land. It can include up to 20 acres, if the land is owned by the homeowner and used for a purpose related to the residential use of the homestead. Additionally, you (as homeowner) must be an individual (for example: not a corporation or other business entity) in order to apply for the exemption.
When to file?
You’ve determined this property is your homestead and you are ready to apply; however, you just left the closing table, and its only August. To be eligible, you must own and reside at the property as of January 1st of the given tax year. (Side tidbit: Taxes in Texas are billed in arrears, meaning the tax bills that come out in the Fall are for the period of time from the previous January through the remainder of the year.) However, great news! If your seller already had the homestead exemption on the property at the time of closing and does not elect to remove the exemption and apply it to another property in Texas before bills are released, you can still benefit from that exemption for the year!
How to file?
Okay! You’ve determined this is your homestead and the calendar is flipped to January… you are ready to file! You have received piles of flyers in your mailbox after closing that look official and instruct you to pay a fee to a company who will do the filing for you. Don’t let the scammers win! It’s free to apply. To apply, taxpayers must submit the completed Residence Homestead Exemption Application (which can be downloaded from the county’s Central Appraisal District website) along with a copy of their driver’s license or state-issued personal ID certificate that lists the same address as the property they are applying for the exemption. This application must be submitted to the appraisal district between January 1st and April 30th of the given tax year. Bonus: There’s no need to reapply every year (unless the chief appraiser sends a new application). Once the homestead exemption is in place, it stays on the property until you sell or assign the exemption to a new homestead property in Texas.
Additionally, if you temporarily move away from your home, you may continue to receive the exemption if you do not establish a principal residence elsewhere, you intend to return to the home, and you are away less than two years. You may continue to receive the exemption if you are away for more than two years if you are in active military or live in a facility providing services related to health, infirmity or aging.
Here are the exemptions you may be eligible to receive:
• School taxes: All residence homestead owners are allowed a $25,000 homestead exemption from their home’s value for school taxes. (Meaning if your home is valued at 100K, they lower your value by 25K, so you are only taxed on 75K)
• County taxes: If a county collects a special tax for farm-to-market roads or flood control, a residence homestead is allowed to receive a $3,000 exemption for this tax. If the county grants an optional exemption for homeowners age 65 or older or disabled, the owners will receive only the local-option exemption.
• Age 65 or older and disabled exemptions: Individuals age 65 or older or disabled residence homestead owners qualify for a $10,000 homestead exemption for school taxes, in addition to the $25,000 exemption for all homeowners. If the owner qualifies for both the $10,000 exemption for age 65 or older homeowners and the $10,000 exemption for disabled homeowners, the owner must choose one or the other for school taxes. The owner cannot receive both exemptions.
• Optional percentage exemptions: Any taxing unit, including a city, county, school, or special district, may offer an exemption of up to 20 percent of a home’s value. But, no matter what the percentage is, the amount of an optional exemption cannot be less than $5,000. Each taxing unit decides if it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which an owner qualifies. The taxing unit must decide before July 1 of the tax year to offer this exemption.
• Optional age 65 or older or disabled exemptions: Any taxing unit may offer an additional exemption amount of at least $3,000 for taxpayers age 65 or older and/or disabled.
For More Information on the available tax exemptions and the application process, contact your local appraisal district or visit the Texas Comptroller’s website at: https://comptroller.texas.gov/taxes/property-tax/exemptions/residence-faq.php