It’s that time of year! If you moved into your home between January 1 – December 31, it’s time to file your Texas Homestead Exemption! Save on your property taxes and check out your Central Appraisal District for forms and additional information.
What is a Homestead Exemption?
A homestead exemption lowers the taxable value on your home which reduces your property tax obligation. In Texas, the residential homestead exemption entitles the homeowner to a $25,000 reduction in value for school tax purposes. Counties, cities, and special taxing districts may offer homestead exemptions up to 20% of the total value. Most counties in North Texas do offer this 20% reduction. A county may also offer a $3,000 exemption if it collects for farm-to-market roads or flood control.
*FYI, this is NOT a service that needs to be paid for – you can do this yourself, so don’t be taken advantage of by companies that offer to do it for you. Below are the most common questions.
Who can file a Homestead Exemption? Anyone who occupies and owns their principal residence.
To qualify and file for a homestead exemption you must own and occupy your home as your principal residence on January 1 of the year application is made and do so before April 30th that year. To be specific, you need to occupy the property by the time the ball drops in New York on Dec. 31! Late applications for a residence homestead exemption will be accepted if filed no later than 1 year after the tax delinquency date for the tax year you are claiming the exemption.
When should you file a Homestead Exemption? You should file the application with your local CAD no later than April 30th.
The process is pretty simple. Just print the form for the Homestead Exemption on your county Central Appraisal District (CAD) site or file online if that option is available. Deadlines are typically April 30th, but the sooner the better so when the Notice of Appraised Value is mailed at the end of April, it will reflect the exemptions.There is no cost for the application or filing, it’s free and you can do it yourself. Don’t be taken advantage of by companies that offer to do it for you.
What is a CAD? Your local Central Appraisal District.
Each county has a Central Appraisal District (CAD). The purpose of the CAD is to appraise all property in that county at market value equally and uniformly for the purpose of property tax assessment and to communicate that value annually to each taxpayer and taxing jurisdiction. This is the same appraisal district you use to keep your property taxes lower and contest the values.
“What if you are unsure if you have filed in the past? You can call or check your CAD’s website.
You can check your county’s Central Appraisal District’s website or call them directly to verify.[/toggle]
What documentation is required for a Homestead Exemption? Your Texas Driver's License with matching address.
You will need your Texas Driver’s License with the address matching the property for the residence you are applying for the exemption.
How much can a Homestead Exemption save me? Potentially hundreds, if not thousands of dollars!
A homestead exemption can save hundreds, if not thousands of dollars (depending on the price of the home). For example, a $300,000 home with a $15,000 homestead exemption has a school tax rate of 1.54%, which means the property taxes would be lowered by $231 per year. ($15,000 exemption x .0154 tax rate = $231 savings).
If that same home has a 20% value reduction homestead exemption for the county with county tax rate of .25%, that saves the homeowner $150 per year. ($300k value x 20% value reduction = $60,000 value reduction x .0025 tax rate = $150 savings).
Can I have more than one Homestead? No.
No, only a homeowner’s principal residence qualifies.
Do I have to reapply annually? No.
If you had a homestead exemption on your home the previous year, you won’t need to reapply again unless your chief appraiser requires it. However, if you haven’t received an exemption on your present home—or if you’ve moved to a new home—you’ll need to file for an exemption.
Benefit of the Homestead Tax Cap
The benefit of the Homestead Tax Cap is a limitation on increases in appraised value, which is a great benefit, especially in an appreciating housing market. The cap applies to your homestead beginning in the second year you have a homestead exemption (because the taxing authorities will most likely adjust your first year’s tax value to be something comparable to your purchase price).
The cap law provides that the taxable appraised value cannot exceed the lesser of:
• This year’s market value; or
• Last year’s appraised value, plus 10% plus the value added by any new improvements made during the preceding year.
If homes are appreciating at more than 10% per year the cap can provide substantial tax savings.
Over 65 Homeowners
A person who is age 65 or older may receive additional exemptions. School districts automatically grant an additional $10,000 exemption for qualified persons who are 65 or older. An additional advantage of the over-65 exemption is the school tax ceiling. Once you qualify, your school taxes will not increase unless you make improvements to the home. Cities, the county, and other taxing units may, but are not required to, offer over-65 homestead exemptions of at least $3,000 and sometimes much more. Please check your county’s website for any additional required documentation in the links provided. See below for more information on the Age 65 or older Homestead Exemption!
It’s my birthday! When can I file for the Age 65 or older Homestead Exemption? The day you turn 65.
You are eligible for these exemptions as soon as you turn 65; you don’t need to be 65 as of the first of the year to apply.
If there are two owners, do both have to be 65 to be eligible for the Age 65 or older Homestead Exemption? No.
No, only one owner has to be 65 or older to be eligible.
Disabled and over the age of 65
If you are 65 or older and disabled homestead owner, you qualify for a $10,000 homestead exemption for school taxes, in addition to the $15,000 exemption for all homeowners. If you qualify for both the $10,000 exemption for age 65 or older homeowners and the $10,000 exemption for disabled homeowners, you must choose one or the other for school taxes. You cannot receive both exemptions.
Surviving Spouse of the 65 or Older Homeowner
If the age 65 or older homeowner dies, the surviving spouse may continue to receive the 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. The Disabled Person exemption and school tax ceiling will not transfer to the surviving spouse; however, they are entitled to continue the County, City or Junior College tax limitation or ceiling (if offered).
Disabled Veterans and Surviving Spouses Exemptions
To receive a Disabled Veteran Exemption, the owner must either be a Veteran who was disabled while serving with the U.S. Armed Forces or the surviving spouse or child (under the age 18 and unmarried) of a disabled Veteran or of a member of the Armed Forces who was killed while on active duty.
100% Disabled Veteran and Surviving Spouse
The Veteran must be classified as disabled by the Veteran’s Administration or the armed services branch in which the owner served, have a service-connected disability, and must be a Texas resident and choose only one property to receive the exemption. The exemption amount that a qualified disabled Veteran receives depends on the Veteran’s disability rating from the branch of the armed service.]
A disabled veteran may also qualify for an exemption of $12,000 of the assessed value of the property if the veteran is age 65 or older with a disability rating of at least 10 percent, totally blind in one or both eyes; or has lost use of one or more limbs.Note: In addition to the information identified above, an applicant for a 100% disabled veterans exemption or the surviving spouse of a disabled veteran who qualified for the 100% disabled veterans exemption, must provide documentation from the United States Department of Veterans Affairs or its successor indicating that the veteran received 100 percent disability compensation due to a service-connected disability and had a rating of 100 percent disabled or individual unemployability.