Texas is known for having some of the highest property tax bills in the country, yet many homeowners might not realize there’s a pathway to potentially lower those payments.
Homeowners in Texas can take advantage of a homestead exemption, which has the potential to significantly reduce the taxable value of their home. This translates into savings on taxes paid to public schools—often the largest portion of one’s tax bill—and possibly even on city and county taxes.
Despite these potential savings, a lot of homeowners don’t actually claim the exemption. There are various reasons for this; some may struggle with the application process or lack the necessary documentation, while others might simply be unaware that such an exemption exists.
This oversight means that many are missing out on significant reductions in their property tax bills, particularly with local tax offices issuing bills this month.
So, here’s a rundown of what you need to know about claiming a homestead exemption.
Who is eligible for a homestead exemption?
To qualify, homeowners must have some ownership in their primary residence and occupy it as of January 1. It’s important to note that you can’t claim more than one primary residence in Texas—or anywhere else, really.
Unfortunately, undocumented homeowners are generally ineligible for the exemption due to legal restrictions related to obtaining a Texas driver’s license, which is necessary for the application process.
What is the exemption amount?
The law in Texas dictates that school districts must provide a homestead exemption of $140,000. For example, if a home is valued at $200,000, a qualifying homeowner would only pay school property taxes on $60,000 of that. Furthermore, homeowners aged 65 or those with qualifying disabilities receive an additional exemption of $60,000 on top of the initial $140,000 reduction.
Once a homeowner reaches 65 years of age, their school tax bill freezes. Additionally, older Texans have the option to pay their property taxes in installments and may qualify for other local school district tax breaks if those options are on the table.
Plus, homeowners with a homestead exemption automatically receive exemptions from any local tax entities, such as cities and counties, that provide similar benefits.
There’s also a 10% appraisal cap at the state level for properties with a homestead exemption, which limits the increase in taxable value each year.
What are the application requirements for a homestead exemption?
Most applicants need to have a valid Texas driver’s license or state ID and submit a clear copy of that identification. The address on the ID must match the property address, although this requirement is relaxed for active duty military members and residents of nursing homes.
In some cases, an heir may qualify for the exemption even if their name isn’t listed on the title. They would need to provide an affidavit to prove their connection to the property, alongside documents like a death certificate and utility bills showing their residence.
There are additional documents required if claiming further exemptions, such as for disabilities or surviving spouses of veterans.
How can you apply for a homestead exemption?
Homeowners should check with their local appraisal district for the application process. They can use the Residence Homestead Exemption Application provided by the Texas Comptroller, which must be accepted by the appraisal districts.
Filing for this exemption is generally free, and many districts allow homeowners to apply online. However, if that option isn’t available, applications can be mailed or delivered in person.
Per state law, appraisal districts are required to make a decision on the application within 90 days.
Once approved, most homeowners won’t need to reapply unless there are changes in their eligibility or if the appraisal district requests verification.
When can you apply for a homestead exemption?
Homebuyers can apply for the exemption once they own and occupy their home as their primary residence, including those who are first-time buyers.
Current homeowners residing in their property as of January 1 must submit their application by April 30.
For those who purchase a home after January 1, the application process can be a bit more complicated. If the previous owner had an exemption, the new homeowner will have to wait until the new year to apply for their own exemption.
If the prior owner didn’t have an exemption, it’s advisable to apply as soon as possible to benefit from the exemption for the remainder of the year.
What if you missed the application deadline?
Even if you missed the deadline, you can still apply for the exemption retroactively. Most eligible homeowners can submit their application up to two years after paying property taxes, which means they could receive a refund for the difference based on the exemption they would have qualified for.
Some categories of homeowners, like disabled veterans, may have up to five years to apply for specific exemptions.
How can you verify if you already have a homestead exemption?
Typically, appraisal districts won’t send an official letter if an application is accepted.
Homeowners can check if they have been granted the exemption by reviewing their property records on the appraisal district’s website or reaching out to the district directly. Additionally, the exemption status will appear on the notice of appraised value that appraisal districts send out in April or on the tax bills sent in October.
