Retroactive Homestead Exemption in Texas - What if you forgot to file your homestead exemption?

You are a first time home-owner in Texas. You moved in three years ago. You are taken aback by the ever-increasing property tax in your county. You dread receiving that annual property value assessment notice from the appraisal district. And you recently found out you could have saved a bunch on your property tax with homestead exemption! Feel like banging your head? :)

Don't worry, you are not alone! Thousands of new homeowners are not aware of this valuable property tax saving mechanism.

Luckily, all is not lost! You can still apply for a homestead exemption retroactively for upto two years and receive a refund for back taxes paid! Want to know more? Read on...

Section 11.431 of the Texas Property Tax Code covers Late Application for Homestead Exemption.

(a) [Effective January 1, 2022] ... the chief appraiser shall accept and approve or deny an application for a residence homestead exemption after the deadline for filing it has passed if it is filed not later than two years after the delinquency date for the taxes on the homestead.

Let's dissect this legalese. Say, you bought your newly constructed home in September 2020 for $300,000 and moved in the next month. You take a few months to settle down in your new home. You brave through the notorious winter troubles that Texas has come to be known for and are eagerly looking forward to the spring. But, before the spring arrives, sometime in late March or early April you receive an affectionate mail from your county appraisal district. It's the annual Notice of Appraised Value (NoV)! Your NoV says the appraisal district valued your property at $350,000! You are flabbergasted! How in the world did that happen?!! You go to your favorite real estate portal and check your property's value. They say its $370,000. And you are pleased! You think your property has appreciated since you bought it. Yeah, the real estate market is hot! You are happy and pay your property tax when the bill arrives late fall. Same thing repeats for the next three years as well. It's 2023 and your appraisal notice says your market value is $700,000! Your 2023 property tax will be more than double what you paid your first year! You are shocked! You can't take it anymore! You search online, talk to neighbors, call up friends and ask them what to do about the soaring appraised value? It's only when your neighbor, Joe, tells you about the homestead exemption that you realize you have been missing out on a valuable property tax saving tool and have been overpaying your property tax!

This is where Section 11.431 comes to your rescue. You can go ahead and apply for a late homestead exemption and claim your exemption for the past two years. In your case, that would be year 2022. But, why not 2020 & 2021? Well, since you moved in to your new home in 2020, January 1st 2021 forms your base year for the purpose of homestead exemption. Your property would be appraised at market value as on January 1st 2021, and you are liable to pay property tax on the market value as appraised. However, your capped appraisal value takes effect from January 1st 2022. i.e., your appraised value for 2022 should have been $350,000 + 10% ie., $385,000 and not $410,000 that the CAD claimed! Similarly, for 2023, your capped appraised value should have been $423,500 ($385,000 + 10%).

Once your homestead exemption is approved, your appraisal district will have to re-appraise your property at the capped appraisal value and refund the excess property taxes you paid. You will automatically receive refund checks in the mail.

Here is what section 11.431(b) from Texas Property Tax Code says about late application:

(b) If a late application is approved after approval of the appraisal records by the appraisal review board, the chief appraiser shall notify the collector for each unit in which the residence is located not later than the 30th day after the date the late application is approved. The collector shall deduct from the person’s tax bill the amount of tax imposed on the exempted amount if the tax has not been paid. If the tax has been paid, the collector shall refund to the person who was the owner of the property on the date the tax was paid the amount of tax imposed on the exempted amount. The collector shall pay the refund not later than the 60th day after the date the chief appraiser notifies the collector of the approval of the exemption. A person is not required to apply for a refund under this subsection to receive the refund.

That means, you will get a refund automatically. You don't have to apply for refund.

What is the last day to file homestead exemption in Texas? What if you forgot to file homestead exemption form in time?

Until 2021, the deadline for homestead exemptions used to be April 30th. Beginning 2022, you can apply for homestead exemption all year round. You can also file for a homestead exemption retroactively for upto two years. When filling out Form 50-114, check the 'Yes' box for 'Are you filing a late application' and indicate the tax year(s) for which you like to retroactively claim exemption. In case you have already paid property taxes for the past year(s), you will get a refund. If not paid, then you will get a new tax bill with a lower amount. If you file your homestead exemption before April 30th, you will be in time for the exemption to take effect when the current year's property tax bills are mailed in fall. Else, it will be applied retroactively.

Is it too late to file for homestead exemption in Texas?

Beginning January 1st 2022, new homeowners can apply for homestead exemption any time of the year. You can also file a late homestead exemption for upto two years after you move in to your primary residence. You can also file for a homestead exemption retroactively for upto two years. When filling out Form 50-114, check the 'Yes' box for 'Are you filing a late application' and indicate the tax year(s) for which you like to retroactively claim exemption. Several new homeowners are unaware of homestead exemption and find out about it after several years. By that time they would have paid an unfair amount of property taxes.