Tax season can be overwhelming, especially if you are a first-time home buyer. Don’t worry, you aren’t alone. Sometimes even experienced home owners don’t realize all the ways in which they could save tax money. One of the most easily claimable property tax exemptions is the homestead exemption. It is easier to apply for and claim than you think.
Luckily, you’re in the right place. Let us walk you through everything you need to know to file for your homestead exemption.
A homestead exemption is a provision to remove a part of your home’s value from being taxed. It is a way to lower your taxes. The exemption depends on the owner and the property’s eligibility.
For example, if your home is valued at $100,000 dollars and you are qualified for a $20,000 exemption, you only pay taxes on your property as if it were worth $80,000. (Skip to the end to know exactly how much of your property’s value can be exempted from being taxed in Texas.)
A homestead is simply the principal residence of the owner. It can be a separate structure, a condominium or a manufactured home on owned or leased land. The homestead includes up to 20 acres of land and any improvements used for residential purposes. If an owner owns multiple properties, only the principal residence may be qualified for the exemption.
The exemption applies to property owned by an individual and to those portions of the property used solely for residence, as opposed to business or any other use.
A home owner can qualify a particular property as the homestead as long as another property is not established the principal residence. However, a home owner must intend to return to occupy the property and can only be absent temporarily for up to a period of two years.
The law provides that homeowners in military service inside or outside the United States or in a facility providing services related to health, infirmity or aging may be away from the home longer than two years and still keep the homestead exemption.
There are no specific qualifications for the general homestead exemption other than that the owner has an ownership interest in the property and uses the property as the owner’s principal residence. An applicant is however required to state that this exemption is not being claimed on any other property in Texas or otherwise.
An applicant must meet those conditions to claim exemptions offered to individuals aged 65 or older or disabled or both to file for those.
To claim homestead exemptions offered to disabled veterans, surviving spouses and children of deceased disabled veterans; and surviving spouses of first responders killed or fatally injured in the line of duty, an applicant must produce the needful documents. Get in touch with your local appraisal district to know more.
A home owner who partly owns the property may only claim the homestead exemptions he is eligible for on his share of the property.
A married home owner who qualifies the property for homestead and their spouse are treated together as community property and considered as 100% ownership for each spouse.
An heir property owner who qualifies the heir property as the owner's residence homestead is considered the sole recipient of any exemption granted to the owner for the residence homestead. In case of multiple heir property owners, each owner other than the principal resident (applicant) must provide an affidavit to authorize such an application.
Proof of residency is provided by updating the home owner’s address on the driver’s license. A home owner may only claim a homestead exemption on the property of which the address is mentioned on his driver’s license.
The requirement to provide proof of address does not apply to a resident of a facility that provides services related to health, infirmity, or aging; or to applicants who are certified for participation in the Attorney General’s Address Confidentiality Program.
A chief appraiser may also waive this requirement for an active duty U.S. armed services member or the spouse of an active duty service member if the application includes a copy of the military identification card and a copy of a utility bill for the residence homestead.
The requirement may also be waived if the applicant holds specific driver’s license issued for judges and the spouses of judges or peace officers and includes with the application a copy of the application for that license.
A home owner may file for any homestead exemption for up to two years after the delinquency date, which is usually February 1
A Texan home owner can claim several types of homestead exemptions.
School taxes: All residence homestead owners are allowed a $25,000 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 residence homestead is allowed to receive a $3,000 exemption for this tax. If the county grants an optional exemption for home owners aged 65 or older or disabled, the owners will receive only the local option exemption.
Age 65 or older and disabled exemptions: Individuals aged 65 or older or disabled residence homestead owners qualify for a $10,000 homestead exemption for school taxes, in addition to the $25,000 general residence homestead exemption for all home owners. If the owner qualifies for both the $10,000 exemption for age 65 or older home owners and the $10,000 exemption for disabled home owners, the owner must choose one or the other for a particular taxing unit. An eligible disabled person age 65 or older may receive both exemptions in the same year, but not from the same taxing units.
Optional percentage exemptions: Any taxing unit, including a city, county, school, or special district, may offer an exemption of up to 20% of a home's value. Irrespective of the percentage, the amount of an optional exemption cannot be less than $5,000. Each taxing unit decides if it should offer the exemption and at what percentage. This exemption is added to any other homestead 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 home owners aged 65 or older and/or disabled.
Disabled veterans who own property in Texas are also offered partial and total homestead exemptions depending on the percentage of service-connected disability rating.
Learn more here.
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