Tips for New Homeowners in Texas – Property Taxes, Homestead & First Year Protests
If you just bought a home in Texas, there are a few important things you should do to avoid property tax issues and make sure you get your homestead exemption on time.
Most new homeowners miss at least one of these steps.
1. Update Your Driver’s License Address First
Before you apply for a homestead exemption, update your Texas driver’s license to your new address.
The appraisal district uses this as proof that the home is your primary residence. Without this, your homestead application may be rejected.
Do this first.
2. Check If the Previous Owner Had a Homestead Exemption
This is very important and many new homeowners don’t realize this.
If the previous owner had a homestead exemption, you get the homestead benefit for the remainder of this year automatically, even before you apply.
You still need to apply for your own homestead exemption, but you will apply next year, not this year.
3. If It’s a New Build or No Previous Homestead
If the home is a new construction or the previous owner did not have a homestead exemption, then apply as soon as your driver’s license address is updated.
You just need to make sure you apply before April 30 of next year.
Benefit of applying early
If you apply soon after moving in, you may be eligible for a prorated homestead exemption for the current year. This can reduce your property taxes for this year itself.
Important nuance if previous owner used it as a rental
If the previous owner was using the property as a rental, property taxes are prorated between buyer and seller at closing.
However, if you later apply for a homestead exemption and receive a prorated homestead exemption, the tax bill for the year reduces and the benefit goes to you, not the seller. So it can still be beneficial to apply early.
4. Homestead Application Is Free and Easy
Most appraisal districts have the homestead exemption form online.
It is:
- Free
- Takes about 10 minutes
- Very straightforward
Do not pay anyone to file your homestead exemption.
If you need help, you can follow my guide here: (Insert link to your homestead guide blog)
5. Make Sure Ownership Gets Updated
Appraisal districts usually update ownership records a few weeks after closing. However, sometimes they don’t.
If your ownership is not updated, contact your appraisal district.
If you are in Harris County, you can submit Form 25.25(b) RP to correct the ownership records.
6. Your First Notice of Value (NoV)
When you receive your Notice of Value, it may still show the previous owner’s name. That is normal in the first year.
Now the important part.
If the appraised value is higher than your purchase price, you should file a protest.
For first-year homeowners, this is usually very easy.
Submit:
- Your closing statement
- Your lender appraisal (if available)
The appraisal district will often match your purchase price.
That’s usually all you need for your first-year protest.
7. Rare Situation: CAD Value Is Lower Than Your Purchase Price
In rare circumstances, the appraisal district may not have your closing price, especially if you bought in the last quarter of the year.
If the CAD appraises your property lower than what you paid, enjoy the lower appraised value for a year. Do not protest.
Some homeowners make a mistake here. They file a protest saying they overpaid and want the value reduced. What you paid has effectively set the market value.
Some people even take this to binding arbitration in the first year itself arguing they overpaid. Frankly, this is usually not worth the time, effort, or arbitration fee.
If the CAD value is lower than your purchase price, that is a good outcome for that year. Leave it alone.
8. First Year Protest Rule of Thumb
| Situation | What you should do |
|---|---|
| CAD value higher than purchase price | Protest and submit closing statement |
| CAD value equal to purchase price | No need to protest |
| CAD value lower than purchase price | Do not protest |
Final Checklist for New Texas Homeowners
If you just bought a house in Texas, remember this order:
- Update driver’s license address
- Check if previous owner had homestead
- Apply for homestead when eligible
- Make sure ownership is updated
- When Notice of Value comes, compare with purchase price
- Protest if value is higher
- Submit closing statement as evidence
- Do not protest if value is lower than purchase price
Follow these steps and your first year property tax process in Texas will be much smoother.
About the Author
Harsha N Hegde is the founder of squaredeal.tax, a DIY platform that helps Texas homeowners protest unfair property tax assessments. He has helped thousands of Texas homeowners save money using comps-based evidence and practical guidance.
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