Savings on Home Taxes
An exemption removes part of the value of your property from taxation and lowers your taxes. For example, if your home is valued at $50,000 and you qualify for a $15,000 exemption, you pay taxes on your home as if it was worth only $35,000. Other than exemptions for disabled veterans or survivors, these exemptions apply only for your homestead. They do not apply to other property you own.Does your home qualify for exemptions?
What home exemptions are there?
You must own your home. To qualify for a general or disabled homestead exemption, you must own your home on January 1. If you are 65 years of age or older, you need not own your home on January 1. You will qualify for the over-65 exemption as soon as you turn 65, own the home, and live in it as your principal residence. You will receive the exemption as of January 1.
Your homestead can be a separate structure, condominium, or a mobile home located on leased land, as long as you own it. Your homestead can include up to 20 acres if the land is used as your yard.
A residence may be owned by an individual through an interest in a qualifying beneficial trust and may be occupied by a trustor of a qualifying trust.
If you are not the sole owner of the home, you will receive only a portion of any qualified exemption, based on your percent of ownership. For example, you own a 25-percent interest in a homestead valued at $100,000, for a total value of $25,000. You will receive 25 percent of a $15,000 school homestead exemption, or $3,750.
You must use the home as your principal residence on January 1. If you have more than one house, you can only get exemptions for your main or principal residence. You must live in this home on January 1.
If you temporarily move away from your home, you can still get an exemption if you don't establish another principal residence and you intend to return. For instance, if you enter a nursing home, your home still qualifies as your homestead if you intend to return.
Renting part of your home or using part of it for a business doesn't disqualify the rest of your home for the exemption.
Note: Texas has two distinct laws for designating a homestead. The Texas Tax Code offers homeowners a way to apply for homestead exemptions to reduce local property taxes. The Texas Property Code allows homeowners to designate their homesteads to protect them from a forced sale to satisfy creditors. This law doesn't protect homeowners from tax foreclosure sales of their homes for delinquent taxes.
Are you a disabled veteran or survivor?
School taxes -- all homeowners You will qualify for a $15,000 homestead exemption on your home's value for school taxes. County taxes -- all homeowners If your county collects a special tax for farm-to-market roads or flood control, you will receive a $3,000 exemption for this tax. If you qualify for local-option exemptions for age 65 or older homeowners, or disabled homeowners (next section), you will receive only the local-option exemptions. Optional exemptions -- all homeowners Any taxing unit, including a school district, city, county, or special district, may offer an exemption for up to 20 percent of your home's value. The amount of an optional exemption can't be less than $5,000, no matter what the percentage is. For example, if your home is valued at $20,000 and your city offers a 20-percent exemption, your exemption is $5,000, even though 20 percent of $20,000 is just $4,000.
Each taxing unit decides whether it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which you qualify. The taxing unit must decide before July 1 of the tax year to offer this exemption.
Age 65 or older homeowners
- If you are age 65 or older, your residence homestead will qualify for more exemptions.
You will qualify for a $10,000 homestead exemption for the school taxes on your home's value, in addition to the $15,000 exemption for all homeowners.
If you qualify for both the $10,000 exemption for over-65 homeowners and the $10,000 exemption for disabled homeowners (see the following section), you must choose one or the other for school taxes. You cannot receive both.
In addition to the $10,000 exemption for school taxes, any taxing unit -- including a school district -- can offer an additional exemption of at least $3,000 for taxpayers age 65 or older.
- Once you receive an over-65 homestead exemption, you get a tax ceiling for that home on your total school taxes. The school taxes on your home cannot increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualify for the over-65 homeowner exemption. The school taxes on your home may go below the ceiling, but the school taxes will not be more than the amount of your ceiling.
However, your tax ceiling can go up if you improve your home (other than normal repairs or maintenance). For example, if you add a garage or a game room to your home, your tax ceiling can go up. Also, your tax ceiling will change if you move to a new home.
When a homeowner who has been receiving the tax ceiling on school taxes dies, the ceiling transfers to the surviving spouse if the survivor is 55 or older and has ownership in the home. The survivor should apply to the appraisal district for the tax ceiling to transfer. The ceiling remains in effect for as long as the spouse lives in the home.
A tax ceiling does not expire when the owner conveys the interest in the home to a trust, if the owner-trustor occupies the home.
When you no longer live in the home as your permanent residence, you will no longer qualify for the over-65 exemption for the remaining portion of that year. Taxes will be prorated based on the number of days that elapsed after you no longer qualified that home for the exemption to the end of the year.
If you purchase another home, you may qualify for the over-65 exemption when you live in the new home as your principal residence. You may transfer the percentage of school tax paid based on your former home's over-65 school tax ceiling to the new home. For example, if you currently have a tax ceiling of $100, but would pay $400 without the tax ceiling, the percentage of tax paid is 25 percent. If the taxes on your new home are $1,000, the new school tax ceiling would be $250, or 25 percent of $1,000. You may request a certificate from the appraisal district for the former home to take to the appraisal district for your new home.
- When homeowners who have been receiving the age-65-or-older exemptions die, the exemptions transfer to their surviving spouses. The surviving spouses must be 55 or older at their spouse's death and must live and have ownership in the home. The survivors should apply to the appraisal district to transfer the exemptions. If your spouse dies in the year of his or her 65th birthday but has not applied for the over-65 exemption, you may apply for the over-65 exemption as the surviving spouse. The exemptions remain in effect for as long as the survivors own and live in the homes.
- Homeowners age 65 or older who apply for the exemptions may also pay their home taxes in installments. See page 24-25 for details.
- If you are a homeowner age 65 or older, you may defer or postpone paying any delinquent property taxes on your home for as long as you own and live in it. To postpone your tax payments, file a "tax deferral affidavit" with your appraisal district.
You may suspend any lawsuit by filing an affidavit with the court. The deferral is for all delinquent property taxes of the taxing units that tax your home.
A tax deferral only postpones paying your taxes. It doesn't cancel them. Interest is added at the rate of 8 percent a year. Once you no longer own your home or live in it, past taxes and interest become due. Any penalty and interest that was due on the tax bill for the home before the tax deferral will remain on the property and also become due when the tax deferral ends.
Homeowners with disabilities A person with a disability also may get exemptions. "Disabled" means either (1) you can't engage in gainful work because of physical or mental disability or (2) you are 55 years old and blind and can't engage in your previous work because of your blindness. If you receive disability benefits under the federal Old Age, Survivors, and Disability Insurance Program through the Social Security Administration, you will qualify.
Disability benefits from any other program do not automatically qualify you for this exemption. Contact your appraisal district for assistance on what information you will need.
If disabled, you will qualify for a $10,000 exemption for school taxes, in addition to the $15,000 exemption for all homeowners.
And, any taxing unit can offer an exemption of at least $3,000 from the home value of taxpayers with disabilities.
Homeowners who are disabled and apply for homestead exemptions also may pay their home taxes in installments. See page 24-25 for details.
You may qualify for a property tax exemption if you are either (1) a veteran who was disabled while serving with the U.S. armed forces or (2) the surviving spouse or child (under 18 years of age and unmarried) of a disabled veteran or of a member of the armed forces who was killed while on active duty. You must be a Texas resident.What should new homeowners do?
You must have documents from either the Veterans' Administration or the branch of the armed forces that show the percentage of your service-related disability. Your disability rating must be at least 10 percent.
If you are a surviving spouse or child, you must have the veteran's disability records. You may need other documents such as proof of marriage or age.
This exemption ranges from $5,000 to $12,000, depending on the extent of the disability. This exemption is not only for a home -- you can apply it to any property you own on January 1. However, you may pick only one property to receive this exemption for the taxing units that tax the property.
The disabled veteran's exemption is different from a disabled homeowner's exemption.
Before you buy a home, you or your mortgage company should get a tax certificate for the home from all taxing units that tax it. The tax certificate will show if delinquent taxes are owed. You can't get a clear property title until you have paid all delinquent taxes. Your mortgage company may pay property taxes on your home out of an escrow account. If this is the case, make sure the tax collectors send the original tax bills to the mortgage company. You may want to request a receipt to see if the mortgage company pays the taxes on time and for federal income tax purposes. You should apply to the appraisal district for a residence homestead and any other exemptions. You must apply to the appraisal district that appraises your home. If your property is valued by more than one appraisal district, you must file the general, disabled, or over-65 homestead exemption in each district office. If you sold your previous home in Texas, make sure it's listed under the new owner's name and address. If your home is new, you should receive a notice of appraised value from the appraisal district in April or May. Contact the appraisal district if you don't receive this notice. If you no longer qualify for the general, over-65, or disabled homestead exemption, you should notify the appraisal district in writing. If you fail to notify the appraisal district and don't pay your taxes, your home will have a 50-percent delinquent tax penalty instead of 12 percent, plus interest.