Savings on Home TaxesAn exemption removes part of the value of your property from taxation and thus lowers your tax bill. 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 were worth only $35,000. Other than exemptions offered to disabled veterans or their survivors, these exemptions apply only to your homestead and not to any other property you may own.
Does your home qualify for exemptions?
- You must own your home.
To qualify for a general homestead exemption, you must own your home on January 1. You can qualify for the over-65 or disabled homeowner exemptions (see below) as soon as you turn 65 or become disabled, as long as you own the home and live in it as your principal residence. You will receive the exemption back to January 1 of that tax year.
Your homestead can be a separate structure, condominium or mobile home located on leased land, as long as you own the home itself. Your homestead includes your house and the land used as your yard, not to exceed 20 acres.
A residence may be owned by an individual through an interest in a qualifying beneficial trust and the residence is occupied by the trustor of the trust. If you are not the sole owner of your home, you will receive only a portion of any qualified exemption, based on your percent of ownership. For example, if 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 receive exemptions only for your main or principal residence. You must live in this home on January 1. A person may not receive a homestead exemption for more than one residence homestead in the same year.
If you temporarily move away from your home, you can still receive an exemption as long as you intend to return and do not establish another principal residence. “Temporarily” means an absence of less than two years. An absence for military service or a stay in a facility providing services related to health, infirmity or aging, however, may be longer. For instance, if you enter a nursing home, your home still qualifies as your homestead if you intend to return to it, even if you are away for more than two years.
Renting part of your home or using part of it for a business does not 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, however, protect homeowners from tax foreclosure sales of their homes for delinquent taxes.
Types of Home Exemptions
- 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 county local-option exemptions for senior or disabled homeowners (see below), you will receive only the county local-option exemptions and not the $3,000 exemption.
- Optional Exemptions – All Homeowners
Any taxing unit, including a school district, city, county or special district, may offer you an exemption for up to 20 percent of your home’s value, with a minimum of $5,000. 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 $4,000.
Each taxing unit decides whether to offer the optional exemption and at what percentage, and must do so before July 1 of the tax year to offer that year. This exemption is added to any other home exemption for which you qualify.
- Age 65 or Older Homeowners
If you are 65 or older, your residence homestead qualifies for more exemptions.
Seniors qualify for a $10,000 homestead exemption for school taxes in addition to the $15,000 exemption offered to 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 aged 65 or older.
When you receive an over-65 homestead exemption, you also receive a “tax ceiling” for your total school taxes; that is, the school taxes on your home cannot increase as long as you own and live in that home. The tax ceiling is set at the amount you pay in the year that you qualify for the over-65 homeowner exemption. The school taxes on your home subsequently may fall below the ceiling, but cannot rise above it.
The county, city or a junior college district also may freeze or limit your taxes by adopting a tax ceiling. The ceiling goes into effect after the unit adopts the limitation and you qualify your home for the over-65 exemption.
Tax ceilings can go up if you improve your home (other than by normal repairs and maintenance). For example, if you add a garage or a room to your home, your tax ceiling can rise. It will also change if you move to a new 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.
If you do not claim another homestead in the same year, you will receive the over-65 exemption for the full year. If you claim another homestead during the same year, you will no longer qualify for the exemption on the old home for the remaining portion of that year. Taxing units will prorate the taxes based on the number of days elapsing after you no longer qualify for the exemption, to the end of the year.
If you purchase another home anywhere in Texas, you may transfer the percentage of school tax paid based on your former home’s over-65 school tax ceiling to your new home. For example, if you currently have a tax ceiling of $100, but would pay $400 in school taxes 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, if it is in a different district.
To transfer your tax ceiling for the purposes of county, city or junior college district taxes, however, you must move to another home in the same taxing unit.
When homeowners who have been receiving the senior exemption and tax ceiling die, these transfer to the surviving spouses, as long as they are 55 or older at their spouse’s death and live in and own the home. The survivors should apply to their appraisal district to transfer the exemption. 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 it as the surviving spouse. The exemption remains in effect for as long as the survivor owns and lives in the home. If a surviving spouse, aged 55 or older, purchases another home, he or she may transfer the percentage of tax paid based on the former home’s tax ceiling to the new home. (See the example above about the percentage of tax to be paid.) Again, to retain the county, city or junior college district tax ceiling, the new home must be in the same taxing unit.
Homeowners aged 65 or older who apply for the exemptions also may pay their home taxes in installments; see page 8 for details.
If you are a homeowner aged 65 or older, you may “defer” or postpone paying any 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 this affidavit with the court or stop a pending tax sale by filing the affidavit with the officer conducting the sale and the appraisal district, taxing unit or taxing unit’s delinquent tax attorney. The deferral applies to all property taxes levied by the taxing units that tax your home.
A tax deferral, however, only postpones your tax liability. It doesn’t cancel it. Interest on the sum due accrues at the rate of 8 percent a year. Once you or your surviving spouse no longer own your home or live in it, past taxes and interest become due 181 days later. Any penalty and interest that was due on the tax bill for the home before the tax deferral will remain on the property and become due when it ends.
- Homeowners with Disabilities
Persons with disabilities qualify for certain tax exemptions. “Disability” means:(A) an inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months; orIf you qualify for disability benefits under the federal Old Age, Survivors and Disability Insurance Program administered by the Social Security Administration, you will qualify for homestead exemptions.
(B) blindness, meaning vision of 20/200 or less in the better eye with the use of a correcting lens, in persons aged 55 or older.
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 to show the district that you are disabled.
If disabled, you will qualify for a $10,000 exemption for school taxes in addition to the $15,000 exemption granted to all homeowners. In addition, any taxing unit may offer an exemption of at least $3,000 off of home value to homeowners with disabilities.
Disabled homeowners have a ceiling imposed on their school taxes similar to that provided to over-65 homeowners. The school taxes on your home cannot increase as long as you own and live in it. School taxes on your home may fall below the ceiling, but will not rise above it.
A county, city or junior college district also may freeze or limit your taxes by adopting a tax ceiling. The ceiling goes into effect after the unit adopts the limitation and you qualify your home.
Your tax ceiling may rise if you improve your home (other than by normal repairs or maintenance). For example, if you add a garage or a room to your home, your tax ceiling can go up. Your tax ceiling also will change if you move to a new home. The ceiling does not expire, however, when a disabled owner conveys his or her interest in the home to a trust, if the owner-trustor continues to occupy the home.
If you do not claim another homestead in the same year, you will receive disabled exemptions for the full year. If you do claim another homestead during the same year, you will no longer qualify for the exemption on the old home for the remainder of that year. Your taxes will be prorated based on the number of days that elapse after you no longer qualify for the exemption.
As with the over-65 exemption, if you purchase another home in Texas, you may transfer your former home’s school tax ceiling to the new one. To do so, you must qualify your former home for the exemption in 2003 or afterward. You may request a certificate from the appraisal district for your former home to present to the appraisal district for your new home. Again, for exemption from taxes levied by a county, city or junior college district, you must transfer the tax ceiling to another home in the same taxing unit.
When homeowners who receive disabled homeowner exemptions die, the tax ceiling (but not the exemptions) offered by a county, city or junior college district transfers to their surviving spouses, if they are disabled or 55 or older at their spouse’s death and live and have ownership in the home. An interpretation of the law is required regarding the transfer of a school tax ceiling to a surviving spouse. To determine how the law for transferring the ceiling is interpreted locally, survivors should apply to their appraisal district.
Disabled homeowners who apply for homestead exemptions also may pay their home taxes in installments.
Disabled homeowners may defer or postpone paying any property taxes on their homes for as long as they own and live in them. To postpone your tax payments, file a “tax deferral affidavit” with your appraisal district. You also may suspend any lawsuit by filing an affidavit with the court or stop the home’s tax sale by filing the affidavit with the officer conducting the sale and the appraisal district, taxing unit or taxing unit’s delinquent tax attorney. This deferral applies to all property taxes of the taxing units that tax your home.
A tax deferral, however, only postpones your tax liability. It doesn’t cancel it. Interest on the sum due accrues at the rate of 8 percent a year. Once you or your surviving spouse no longer own your home or live in it, past taxes and interest become due 181 days later. Any penalty and interest that was due on the tax bill for the home before the tax deferral will remain on the property and become due when it ends.Are you a disabled veteran or survivor?
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 a member of the armed forces who was killed while on active duty.
You must be a Texas resident to receive this exemption. You also must have documents from either the Veterans’ Administration or the appropriate branch of the armed forces showing 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 as well, 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. You may pick only one property to receive the exemption, however.
What should new homeowners do?
- Before you buy a home, you or your mortgage company should obtain a tax certificate for the home from all jurisdictions that tax it.
The tax certificate will show whether delinquent taxes are owed on the property; you can’t get a clear property title until you have paid all delinquent taxes.
- If your mortgage company pays property taxes on your home out of an escrow account, make sure the taxing units send original tax bills to the company.
You may want to request a receipt to verify that the mortgage company pays these taxes on time, and to use 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 exemption application 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 your appraisal district in April or May; contact the district if you don’t receive it, or if it does not list all taxing units to which you will owe taxes.
- 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 do so and don’t pay your taxes in full, you will face a 50 percent delinquent tax penalty, plus interest.
How To File for an Exemption on Your Home
- Obtain an application form at your local appraisal district office. (A separate application is needed for the disabled veteran’s exemption.)
- Return the form(s) to the appraisal district office after January 1 but no later than April 30.
- Provide all the information and documentation requested. For example, if you are claiming an over-65 or disabled exemption, you may need to show proof of age or disability. Remember that making false statements on your exemption application is a criminal offense.
- If your property is valued by more than one appraisal district, you must file an exemption application in each appraisal district office. This can occur when your property is located in a taxing unit that crosses county lines. Contact your appraisal district if you aren’t sure.
- You may file for a homestead exemption and/or a disabled veteran’s exemption up to one year after the date upon which taxes become delinquent. You will receive a new tax bill with a lower amount, or a refund if you have already paid.
- If you turn 65 this year, you may file for the over-65 exemption up to one year from the date upon which you turned 65.
- If the chief appraiser asks you for more information by sending you a written request, you have 30 days to reply from the postmark date.
- If the chief appraiser denies or modifies your exemption, he or she must notify you in writing within five days. This notice must explain how you can protest before the ARB.
- Once you receive a homestead or disabled veteran’s exemption, you don’t have to apply for it again unless the chief appraiser asks you to do so or unless your qualifications change. If you move to a new home, you must fill out a new application to receive exemptions on the new home and to transfer any tax ceiling. If you become disabled or turn 65, you should file a new application that year to receive more exemptions.
- The chief appraiser may require you to submit a new application by sending you a written notice and an application form. If you don’t return it, you may lose your exemptions.
Taxpayers' Rights, Remedies and Responsibilities
January 2005
January 2005