Did you purchase a home recently in Texas? If you have, I bet your real estate agent has been stressing the importance of applying for a homestead exemption on your new place. It's one of those things that can really make a difference in how much you pay in property taxes each year, so it's definitely worth understanding all the ins and outs. In this blog, I'll answer some of the most commonly asked questions about residence homestead exemptions and walk you through the steps on how to apply for one.
What is a homestead exemption?
A homestead exemption is a tax break applied to your primary residence. It removes part of your home's value from taxation, ultimately lowering your property taxes.The exemption stays in effect for as long as you own the property as your principal residence.The current homestead exemption in Texas is $100,000. Per Tax Code 11.13 (B), school districts are required to provide a $100,000 exemption on your primary residence (your homestead). It's like an incentive for buying a home!
Are there other types of property tax exemptions in Texas?
In addition to the homestead exemption, Texas offers variousproperty tax exemptionsfor homeowners, including exemptions for disabled individuals and those aged 65 and older.
For disabled military veterans, the amount of property tax exemption varies depending on their disability rating determined by the U.S. Department of Veterans Affairs.
If you have a 100% disability rating, you are completely exempt from paying property taxes. This same rule applies to the surviving spouse of a 100% disabled military veteran.
The Comptroller'sProperty Tax Exemptions(PDF)offers a summary of the exemption provisions.
How is assessed value determined for calculating property taxes?
The Central Appraisal District (CAD), which exists in every county, is mandated by law to conduct property appraisals every year on January 1.
The CAD starts with the appraised value of your home, representing its estimated market value. From there, they subtract any property tax exemptions you qualify for. These exemptions could include the homestead exemption, among others, which can reduce the taxable value of your property.
Once these deductions are made, the remaining value is known as the assessed value. This assessed value is the basis for calculating your property taxes each year.
Here's an example of how it works:
Suppose your property is appraised at $300,000, and you qualify for the $100,000 homestead exemption. In this case, you'd pay property taxes on your home as if it was worth $200,000.
$300,000 (appraised value) - $100,000 (homestead exemption) = $200,000 (assessed value).
If your property tax rate is 2%, you would pay $4,000 per year with the homestead exemption.
Without the exemption, you'd pay $6,000 in annual property taxes. The exemption saved you $2,000.
How do you qualify for a homestead exemption?
To qualify for a homestead exemption in Texas, you must own and occupy your property as your principal residence. Once the homestead exemption has been granted, it will remain in effect for as long as you continue to own and occupy the home as your primary residence.
How do you apply for a homestead exemption?
First, you will need to submit a completed application form to the county appraisal district where the property is located. This form can be downloaded from the country appraisal district's website. For Fort Bend County residents, here is alinkto the Residence Homestead Exemption Application.
Next, you will need to provide a copy of your updated Texas-issued driver's license or other valid photo ID showing your current physical address, which matches the property for which you are applying for the homestead exemption. Plus, you may be required to provide additional documentation, such as a utility bill, proof of ownership, like deed, or closing statement.
The application is FREE and you only have to apply one time. The exemption stays in effect for as long as you own the property as your principal residence. Once the application is submitted, the county appraisal district will be able to process your application. It could take up to 90 days to process.
When is the deadline to apply in Fort Bend County?
The homestead exemption applications are due by April 30.However, there's good news! As of January 1, 2022, you can apply for your homestead exemption as soon as you move into your new home and get your Texas Driver's License updated. A qualifying new home is eligible for a homestead exemption from the date of purchase, without having to wait until next year to apply.
If you missed the April 30 deadline for applying for the Fort Bend County homestead exemption, don't worry! You still have a chance. You can apply for the exemption within two years from the original application deadline. So, even if you missed the initial cutoff, you can still take advantage of the homestead exemption by submitting your application within the extended 2-year time frame.
If you applied for the exemption within the extended two-year time frame, there's a potential benefit for you. The CAD may refund any overpaid property taxes that you paid during the period when your exemption was not yet in effect. This means if you qualify for the homestead exemption and you paid more taxes than necessary, the CAD will correct it by refunding the excess amount.
What happens if you move out but don't sell your home?
The homestead exemption is only available to homeowners who actually live in their homes. If you temporarily move away, you can still receive the homestead exemption as long as you intend to return to your home and do not establish another principal residence during your absence. Temporarily' means an absence of less than two years.
If you enter a nursing home and intend to return to your home as your principal residence, your home can still qualify for the homestead exemption in Texas, even if you are away for an indefinite period exceeding two years. The key factor is your intent to return and occupy it as your primary residence. So, as long as you maintain that intention, your home remains eligible for the exemption.
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