Understanding Homestead Exemptions

Understanding Homestead Exemptions

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My clients often ask me what Homestead Exemption is all about, here's a good article covering everything you need to know.

Have you recently purchased a new home?

Are you 65 or older? Are you a surviving spouse?

In hard economic times, Texas Homestead is a blessing. It is used to protect homeowners against creditors during the homeowner's financial crisis. During a foreclosure and bankruptcy, the homestead status is used to prevent a forced sale of the homeowner's primary residence. The primary residence can be of any value, less than 10 acres in an urban setting and 100 acres for property in a rural setting.

For a typical homeowner, it’s a great way to reduce your overall property taxes. How? An exemption removes part of the value of your property from taxation and lowers your taxes. Another reason to love Texas!!

In Texas, we deduct $15,000 off the property assessment value towards the school property taxes - which often the case is the largest portion of our property tax bill. For example, if your home is valued at $125,000 and you qualify for a $15,000 exemption, you pay taxes on your home as if it was worth $110,000. This exemption only applies to your principal residence, not to any other property you own. Taxing units have the option to offer a separate exemption of up to 20% of the total value.

Exemption requirements

Qualifying for a homestead exemption is easy. Here's what you need to qualify:

You must own your home and it must be your principal residence. To qualify for a general exemption, you must own your home on January 1. If you are 65 years of age or older or disabled, you need not own your home on Jan. 1. You may apply for the homestead exemption as soon as you qualify and will receive the exemption as of the previous Jan. 1.

Your homestead can be a separate structure, condominium or a mobile home located on leased land, as long as you own it. And, for all you ranch owners, your homestead can include up to 20 acres if the land is used as your yard. A residence can also be owned by an individual through an interest in a qualifying beneficial trust and can be occupied by a trustee of a qualifying trust.

You must use the home as your principal residence on Jan. 1. If you have more than one house, you can get an exemption only for your main or principal residence. You must live in this home on Jan. 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 does not disqualify the rest of your home for the exemption.

The application with all required documentation between January 1 and April 30 must be completed for the year for which you are requesting an exemption.

There are several types of exemptions:

School taxes: All residential home owners may receive a $15,000 homestead exemption from their home's value for school taxes.

County taxes: If a county collects a special tax for farm-to-market roads or flood control, a residential homestead owner may receive a $3,000 exemption for this tax. If the county grants an optional exemption for homeowners age 65 or older or disabled, the owner will receive only the local-option exemption.

Age 65 or older and disabled exemptions: Individuals who are 65 and older and/or disabled and are residential home owners may qualify for a $10,000 homestead exemption for school taxes, in addition to the $15,000 exemption for all homeowners. If the owner qualifies for both the $10,000 exemption for 65 and 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 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.

One more very important note…..beware of homestead exemption scams!!!

There is no fee for making the application for a homestead exemption. Again, there is no fee!! However, certain companies offer to "process" your application for a fee, notifying homeowners by sending you a letter in the mail. These letters usually will start appearing in your mailbox around the first few weeks in January. THROW THEM AWAY! They come looking like an official government document and state that the fee must be paid for the homeowner to get the exemption. AGAIN, THROW THEM AWAY!

These companies, with their very official-looking solicitation letter, say that for a fee (usually $50 or more) they'll take care of your homestead exemption application. But the fact is that Texas law requires all these companies to make it clear that they are not a governmental agency. Still, many people are confused by these letters and send in the fees.

Once again, filing for a homestead exemption is FREE. You just fill out a simple application and mail it in – no fee required. Please don’t be scammed out of $50 in the process.

Source: Realty Times

Laneal Ernest Headshot
Phone: 214-455-9004
Dated: November 16th 2015
Views: 944
About Laneal: Laneal was born and raised in New Orleans, LA and has been a resident of Dallas, TX since 1995. Afte...

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