Congratulations on your new Texas home! As you settle in, don’t forget one crucial task: filing for a Texas Homestead Exemption. This exemption can save you hundreds, if not thousands, on property taxes each year, and recent changes mean new homeowners can benefit even sooner.
Let’s dive into everything you need to know about homestead exemptions, including what you could potentially save.
What is a Homestead Exemption?
A homestead exemption lowers the taxable value of your primary residence, resulting in a significant reduction in property taxes. These savings apply to local school district taxes and potentially other local taxes, depending on your location.
The Big News for New Homeowners: File Your Homestead Exemption Right Away!
Previously, new homeowners had to wait until January 1 of the following year to apply for the homestead exemption. But as of January 1, 2022, you can apply in the same year you purchase your home. This means your property tax savings can start sooner than ever!
Types of Homestead Exemptions in Texas and Potential Savings
Here’s a breakdown of the types of exemptions available and what each could save you annually:
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General Residence Homestead Exemption
- Savings: This exemption provides a $100,000 reduction in your home’s taxable value for school district taxes. For example, if your school district tax rate is 1.25%, this exemption would save you about $1,250 per year on school taxes alone.
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Age 65 or Older and Disabled Exemptions
- Additional Savings: If you’re 65 or older or have a qualifying disability, you qualify for an extra $10,000 exemption on top of the $100,000 general exemption for school district taxes. At a tax rate of 1.25%, this additional exemption could save you another $125 per year, totaling $1,375 when combined with the general exemption.
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Optional Local Percentage Exemptions
- Savings Vary by Locality: Some cities, counties, or other local taxing units offer an additional exemption of up to 20% of your home’s value, with a minimum exemption amount of $5,000. If your property is valued at $300,000, for example, a 20% exemption could reduce your taxable value by $60,000. At a 2% tax rate, this exemption would save you around $1,200 annually. Check with your local appraisal district for any additional savings in your area.
Qualifying for the Homestead Exemption
To qualify, you’ll need to meet these basic requirements:
- Ownership and Residency: You must own and occupy the property as your primary residence as of January 1 of the tax year (or by the date of purchase for new homeowners).
- Texas Residency Proof: A Texas driver’s license or state ID with your home address is required.
- Eligible Property Types: Single-family homes, condos, and manufactured homes are all eligible, as long as they are your primary residence. Up to 20 acres of land can also qualify if used for residential purposes.
How to File for Your Homestead Exemption
- Get the Application Form: Download the Texas Residence Homestead Exemption Application (Form 50-114) from the Texas Comptroller’s website or your county appraisal district’s site.
- Complete the Form: Fill in details like your property address, ownership info, and when you moved in.
- Submit Proof of Texas Residency: Include a copy of your Texas driver’s license or state ID, with the address matching your new home.
- File by April 30: This is the typical deadline, but Texas allows late applications up to two years after the tax delinquency date (usually February 1).
Additional Benefits for Qualifying Homeowners
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Tax Ceiling for Seniors and Disabled Homeowners: If you qualify, school taxes on your home are “frozen” at the amount you paid in the year you first receive the exemption, preventing increases as long as you live in the home.
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Portability of the Tax Ceiling: If you move to a new primary residence in Texas, you can transfer a portion of this “frozen” tax amount to your new home, provided you secure a certificate from your previous appraisal district.
Don’t Miss Out on These Savings!
Applying for your homestead exemption is simple, and it can make a big difference in your property tax bill each year. With the new option for immediate filing in the year of purchase, you can enjoy these savings right away. Whether you’re planning to stay long-term or it’s your starter home, this exemption helps make Texas homeownership more affordable.
File your Texas Homestead Exemption today and start lowering your property taxes right away. Visit your county appraisal district’s website to download the application, or contact your local real estate expert for guidance.
Welcome to Texas, and happy saving! 🏡
