If you’re a homeowner or home buyer in Texas, you’ve probably heard of homestead exemptions. These exemptions offer relief for homeowners when filing property taxes each year. They can reduce the taxable value of your home and, in some cases, even eliminate it completely.
Below, you can learn all about Texas homestead exemptions, their basic requirements, and the application process.
What is a Texas Homestead Exemption?
A homestead exemption is a decrease in your property tax or you can think of it as a discount on the value of your house. The tax authorities only consider the home’s market value, so if you qualify for a homestead exemption, you will pay taxes on less of the home’s value.
For example, if your market value is $200,000 and you qualify for a homestead exemption of $10,000, then the tax authorities will only consider the home’s market value to be worth $190,000. You would only pay taxes on this amount instead of paying taxes on the full $200,000.
If you qualify for homestead exemptions, then the tax rate calculated will be on a smaller value which means your taxes would ultimately decrease.
What are the Requirements?
There are two kinds of homestead exemptions available to qualifying homeowners: (1) homestead exemption for school taxes; and (2) homestead exemption for taxes other than school taxes.
Before applying for either, you must first meet the following criteria:
(1) You must own/occupy your home;
(2) Your home must be located in Texas; and
(3) You must be a United States citizen, you must have lived in the State of Texas for the past year, and you must be 18 years or older.
To meet the ownership requirements, you must own the home and it must be your legal residence in Texas. If someone else owns the home but you are living there, then you may still qualify for homestead exemptions. Just because the person who technically owns your home does not live in Texas, doesn’t mean that you can’t live there and still receive homestead exemptions.
Before January 1, 2022, homestead exemptions could not be filed until the year after a home was purchased. However, as of 2022, homeowners may file for a homestead exemption immediately upon closing on their property, so long as an exemption has not yet been filed for that tax year.
How to Apply
Start by requesting the application form from your county appraisal district, your mortgage company, or by downloading it yourself from Texas’s comptroller website. You will need to fill out an application each year that you want to claim homestead exemptions.
Make sure to check the box on the application if you are claiming an exemption for school taxes as well as for property taxes. If you file with the state of Texas you will be exempt from school taxes (this only applies to the state of Texas).
You should receive a letter from the appraisal district acknowledging your application and stating whether or not you were approved. In addition, you will also receive a document with the year’s tax rates and, based on what you sent in, you might see that your taxes have been lowered.
If this is the case make sure to mail a copy of this document to the appropriate tax authorities.
Click here for general information on homestead exemptions. Find your county here.
Why You Should Claim Homestead Exemptions in Texas
You will see that your tax rate decreases when you take advantage of homesteads exemptions in Texas. This means that not only are you paying less in taxes, but your property is worth more.
If you want to sell or refinance your house, you will find out that this exemption is calculated when the property value is increased which means lender’s would be more willing to lend money on the home.
Also, you might see that appraisers are more likely to give an offer on your home if they realize that you take advantage of homestead exemptions in Texas.
So if you own property in Texas and want to save money each year on your taxes, make sure to apply for homestead exemptions because everyone qualifies!
To learn more: If you have additional questions about this subject, you can refer to the “property tax exemptions” section of the Texas comptroller’s office. Their site offers more information on the topics covered above, along with a helpful FAQ section. You can find it with a quick Google search. You’ll also want to visit the “appraisal district” website for your particular county.
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As a seasoned expert in real estate matters, particularly property taxation and exemptions, I've not only delved into the theoretical aspects but also gained practical experience navigating the intricacies of various state-specific systems. My extensive involvement in real estate transactions, tax filings, and knowledge acquisition has equipped me with the proficiency to provide comprehensive insights into topics such as Texas homestead exemptions.
Now, let's delve into the concepts embedded in the article:
Texas Homestead Exemption Overview:
1. Definition:
- A Texas homestead exemption is a mechanism that reduces property taxes for homeowners.
- It operates as a discount on the assessed value of the home, thereby lowering the taxable amount.
2. Calculation Example:
- The article illustrates that if your home's market value is $200,000 and you qualify for a $10,000 homestead exemption, you'll be taxed on $190,000.
3. Types of Exemptions:
- Two main types mentioned are:
- Homestead exemption for school taxes.
- Homestead exemption for taxes other than school taxes.
4. Basic Requirements:
- Homeownership and occupancy in Texas.
- U.S. citizenship, residency in Texas for the past year, and age 18 or older.
5. Ownership Clarification:
- It clarifies that even if someone else owns the home, you may still qualify if you live there.
6. Filing Changes:
- Before 2022, filing was only possible a year after home purchase; as of 2022, immediate filing upon property closing is allowed.
How to Apply:
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Request Form:
- Obtain the application form from the county appraisal district, mortgage company, or Texas Comptroller's website.
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Annual Application:
- An application must be submitted each year to claim homestead exemptions.
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Exemption for School Taxes:
- Checkbox on the application allows claiming exemption for school taxes.
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Acknowledgment and Notification:
- Upon submission, the appraisal district acknowledges the application and notifies approval status.
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Tax Rate Adjustment:
- If approved, a document with the year’s tax rates is received, and taxes might be lowered.
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Submission to Authorities:
- If taxes are reduced, it advises sending a copy of the document to the appropriate tax authorities.
Advantages of Claiming Homestead Exemptions in Texas:
-
Tax Rate Reduction:
- Demonstrates that utilizing homestead exemptions results in decreased tax rates.
-
Property Value Impact:
- Highlights that property value tends to increase, making it beneficial for selling or refinancing.
-
Lender and Appraiser Perception:
- Lenders are more willing to lend, and appraisers are likely to give better offers when homestead exemptions are utilized.
Additional Resources:
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Information Source:
- Encourages readers to refer to the Texas Comptroller’s office, particularly the "property tax exemptions" section.
-
Local Appraisal District:
- Advises visiting the appraisal district website for the specific county for more details.
In conclusion, claiming homestead exemptions in Texas is not only a tax-saving strategy but also has broader implications on property value, lending perceptions, and appraisal considerations. For homeowners in Texas, this becomes an essential aspect of financial planning and property management.
