It is an unfortunate reality of living in Texas that we lean toward some of the higher residential property taxes in the country.
Of course, that doesn’t mean there’s nothing we can do about. There are, in fact, a number of tax exemptions that can help to offset some of those taxes.
Texas offers both partial and absolute exemptions, but the most common property tax exemption is the homestead exemption.
What is a Homestead Exemption?
The homestead exemption is one of the most common property tax exemptions in Texas. It is a partial exemption (meaning that the value of the property that can be taxed is reduced by a fixed dollar amount).
And even though this is one of the more straightforward exemptions, no one (except accountants) really likes delving deep into tax laws. So, let’s take a look at some of the higher-level details and find out if you qualify for a homestead exemption in Texas.
If you own (or are going to own) a home, these are the elements you need to know.
- It is available to homeowners in their primary residence.
- School districts are required to offer a $25,000 exemption on residence homesteads.
- Other types of taxing units can offer this exemption. They are allowed to offer exemptions up to 20% of the property’s appraised value. If they are going to offer it, though, it cannot be less than $5,000.
- School districts are also required to offer an additional $10,000 exemption to people who are 65 years old or older. This may also apply to disabled people.
- Other taxing units can also offer an exemption for those over 65, as long as it is no less than $3,000.
- This exemption can only be applied to the portions of the house or property that is actually being used as a residence. In other words, if you have a room set aside for doing business of some kind, it will not be included.
- The definition of a homestead can include up to 20 acres of land and many of the improvements made to the property for residential purposes.
How Are Property Taxes in Texas Determined?
Property tax in Texas is assessed and administered locally, and annually, by county appraisal districts.
What this means is that there is no state property tax, but it also means that this is what local governments rely on for many of their critical services. In fact, property taxes bring in the most money of all taxes available to local government, and they go to pay for the roads, schools, emergency services and more.
Each year, appraisal districts will evaluate all the property in a county, and the property tax rates are then calculated based on the total property value and total revenue need. Homes are usually appraised at the beginning of the year, and then the appraisal review board hearings will begin in May where any disagreements about any findings can be heard.
The final amount a homeowner is taxed is a simple percentage of the home’s appraised value. So, a $200,000 home at a 1.5% total tax rate will mean that the homeowner will owe $3,000 in annual property taxes.
Applying for Your Exemption
In order to qualify for property tax exemptions, you must visit your local appraisal district to fill out the necessary paperwork as the appraisal district is not going to automatically give you these discounts.
In other words, it’s up to you to properly file an exemption application with the appraisal district. The district chief appraiser will then determine whether or not a property qualifies.
The good news is that there really aren’t many qualifications for the general homestead exemption, so it is a relatively painless process.
The only thing that really matters is that the owner has an ownership interest in the property and uses the property as the primary residence.
On your application, you must also be able to state that you do not claim an exemption on another residence homestead in or outside of Texas.
Other than that, the information you will need to present include a copy of your driver’s license or state identification card. The address on your identification must match the address of the property that you’re applying for the exemption for. (Though there are some special circumstances in which this qualification can be waved, like military service.)
If you further qualify for the 65 and older exemption, most of the same rules still apply. You must live in the house as your primary residence, and the address must match the information on your state identification.
The Value of a Home
The true value of a great home goes far beyond what is taxable and what is eligible for an exemption.
Contact Joshua Downey today to discover more about the homes in this area and find the one that is going to be truly valuable to you and your family.