Around this time of year, it’s natural for homeowners who have purchased a home in the previous year to start thinking about property taxes. One question your tax preparer may ask homeowners is if they have submitted an application for the Residential Homestead Exemption.
When it comes to Homestead Exemptions and your property taxes you may have questions and want to learn more. You’re in the right place to get some answers.
According the Texas Comptroller’s website:
Homestead exemptions remove part of the home's value from taxation, meaning this exemption lowers your taxes.
Homeowners are eligible to apply for homestead exemptions on their primary residence. For instance, if your home is appraised at $300,000, and you qualify for a $40,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it was worth only $260,000. Taxing units have the option to offer an additional exemption of up to 20% of the total value.
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 Jan. 1 of the tax year. An age 65 or older or disabled exemption is effective as of Jan. 1 of the tax year the applicant qualifies for the homestead and applies to the entire tax year.
A residence homestead can be a separate structure, condominium or a manufactured home located on owned or leased land, as long as the individual living in the home owns it. A residence homestead can include up to 20 acres, if the land is owned by the homeowner and used for a purpose related to the residential use of the homestead.
The completed application and required documentation are due no later than April 30 of the tax year for which you are applying. A late residence homestead exemption application, however, may be filed up to two years after the delinquency date, which is usually Feb. 1. Source: Texas Comptroller’s website
The Texas Legislature has passed a new law effective January 1, 2022, permitting buyers to file for homestead exemption in the same year they purchase their new home. This will allow for a qualifying new home to be eligible for a homestead exemption from the date of purchase. Previously homeowners had to wait until the next year to file for the homestead exemption.
The Comptroller’s website explains there are several types of exemptions a homeowner may be eligible to receive:
• School taxes: All residence homestead owners are allowed a $40,000 residence 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 homeowners age 65 or older or disabled, the owners will receive only the local-option exemption.
• Age 65 or older and disabled exemptions: Individuals age 65 or older or disabled residence homestead owners qualify for a $10,000 residence homestead exemption for school taxes, in addition to the $40,000 exemption for all homeowners. If the owner qualifies for both the $10,000 exemption for age 65 or older homeowners and the $10,000 exemption for disabled homeowners, the owner must choose one or the other for school taxes. The owner cannot receive both exemptions.
• Optional percentage exemptions: Any taxing unit, including a city, county, school, or special district, may offer an exemption of up to 20 percent of a home's value. But, no matter what the percentage is, the amount of an optional exemption cannot be less than $5,000. Each taxing unit decides if it will offer the exemption and at what percentage. This percentage exemption is added to any other home 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 taxpayers age 65 or older and/or disabled.
If you reside in Fort Bend County, you can complete at application with the Fort Bend Central Appraisal District (FBCAD) or apply online for the homestead exemption at https://www.fbcad.org under “E-Services” > “Exemptions Portal.”
If you reside in Harris County, you can complete at application with the Harris County Appraisal District (HCAD) or apply online for the homestead exemption at https://www.hcad.org under the “Forms” tab.
While your real estate professional may be familiar with certain applicable taxes it’s always best to seek out a financial professional for their insights and advice. Use this blog post as a conversation-starter when you meet with your tax preparer or financial advisor.
Let me know how I can serve you and your family. I’m happy to be of assistance and would love to help you take advantage of the Texas Legislature’s new law permitting buyers to file for homestead exemption in the same year they purchase their new home. The first quarter of the year is an amazing time to schedule some listing tours.
Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers, and citywide was the #2 Top Producing agent in 2020, and #3 in 2021. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region.
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