When it comes time to pay the property taxes and/or adjust your monthly payment for the current year’s property tax, we at The Texas Note Company often find that homeowners have not filed the Homestead Exemption on their property. Often the case, especially with first time buyers, is they do not even know that the Homestead Exemption exists. It is a great way to save money.
What is the Homestead Exemption? The Homestead Exemption helps you save on taxes on your home. An exemption removes part of the value of your property from taxation and lowers your taxes. For example, if your home is valued at $100,000 and you qualify for a $20,000 exemption, you pay taxes on your home as if it was worth only $80,000. If your mortgage lender escrows your taxes, this will also lower your monthly escrow payment which lowers your total monthly payment.
The Homestead Cap is an additional benefit of the General Homestead Exemption, especially in an appreciating housing market, is the homestead cap, or limitation on increases in appraised value. The cap applies to your homestead beginning in the second year you have a Homestead Exemption. The cap law provides that if you qualify, the value on which your taxes will be calculated (called your appraised value) cannot exceed the lesser of:
- This year’s market value; or
- Last year’s appraised value, plus 10% plus the value added by any new improvements made during the preceding year.
If homes are appreciating at more than 10% per year, the cap can provide substantial tax savings
There are application deadlines for the exemption; you should file your regular residential Homestead Exemption application between January 1 and April 30. Early applications will not be accepted. If your application is postmarked by April 30, this will allow the district time to process it before your tax statement comes out in the fall. If you miss the April 30th deadline you can still apply.
To get the general $25,000.00 Homstead Exemption you file an Application with your County Appraisal District (CAD). Once you have received the exemption you do not need to reapply
Not all homes qualify for the Homestead Exemption, only a homeowner’s principal residence qualifies. To qualify, a home must meet the definition of a residence homestead: The home’s owner must be an individual (for example: not a corporation or other business entity) and use the home as his or her principal residence on January 1 of the tax year. If you are age 65 or older, or disabled, the January 1 ownership and residency are not required for the age 65 or disabled homestead exemption.
For a general exemption: up to
one year after the date taxes became delinquent for the year (usually February 1 of the year following the tax year).
For an over-65 or disabled person: if you turn 65, become totally disabled, or acquire a property during the year, you can apply and have the over-65 or disability exemption activated for that year. The deadline to apply for an over-65 or disabled person’s exemption for the year in which you qualify is the first anniversary of the date you qualify. In other words, you have one year from the date you qualify to apply. For example:
- If you are already qualified and you purchase a different home, you have one year from the date you occupy the new home to apply.
- If you turn 65 during the year, you have until your 66th birthday to apply for the year in which you turn 65.
- If you become disabled during the year, you have one year from the date you became disabled to apply.
Otherwise, the deadline for applying for the over-65 or disability exemption is the same as the deadline given above.