Save Money on Property Tax through Homestead Exemption
Aren’t Taxes a pain? Well we have something for you that may makes it almost painless and that through Homestead Exemptions. These exemptions can help you save some of your hard earned money paid in the form of property tax.
It’s very simple! Just take the value of your home and subtract the homestead exemption that you qualify for. You will then only be taxed on the remaining value of your home. i.e. If your home is valued at $200,000. And you obtain homestead exemption of, say $40,000, your property tax will be assessed on home value of $200,000-$40,000=$160,000, thus helping you to save on a lot of money.
Homestead exemptions available to all homeowners in Texas
School taxes- Depending upon your qualification for homestead exemption, school district taxes are levied on an amount lesser by up to $25000
County taxes- If you qualify for homestead exemption, county taxes are levied at $20000 lesser than the value of your home
Optional exemptions- You become eligible for a tax exemption of up to 20% on all taxes levied by the authorities whether it is school district, city council, or any other local authority. The total amount on which this exemption applies remains equal to or more than $5000 no matter what percentage is offered. For the sake of example, if your city council levies 20% tax and the value of your home is $20000, the exemption for you will be $5000 and not $4000. The percentage of exemption for any homeowner is decided by the governing body of the civic authority. The total exemption is then the sum of the homestead exemption and the exemptions offered by different civic authorities.
Deadline for applying for homestead exemption
The last date of application for homestead exemption is 30 April and you can apply for this exemption between 1 January and 30 April. Your application is processed in time to apply exemptions to your tax assessments that are usually issued during fall. If however, you miss this 30 April deadline, you still have time to apply for an exemption.
You can apply for a general exemption up to one year after the date taxes become delinquent
You can activate the exemption if you apply within the first year of being eligible for such exemption (Over 65 or being disabled).
If you are over 65 or disabled and buy a new property, you can apply for exemption within one year of the date of purchase of this property.
If you reach the age of 65 during this year, you can apply for exemption till the date you turn 66.
If you become disabled after the purchase, you have one year from the date of becoming disabled to apply for an exemption.
Is there any cap on homestead exemption?
One benefit of the homestead exemption is the cap it places on the increase in the value of the home. In a time when home prices are appreciating with each passing year, this is a big advantage for homeowners. Once you have qualified for homestead exemption, the figure at which taxes are calculated for your property cannot be more than the lesser of the following.
· Market value of home in present year
· Value appraised last year +10%+ value of home improvement carried out last year
This cap comes handy in times when home values are appreciating at more than 10% per annum.
Homeowners over the age of 65
There are certain exemptions for homeowners over the age of 65 and you become eligible for them as soon as you turn 65. It is not necessary to be 65 or more at the start of the year to apply for these exemptions. For example, an exemption of $10000 is applicable on all homeowners as soon as they turn 65 from School Districts. This is an additional exemption over an above other exemption allowed by School Districts. This means your school taxes will not increase after attaining the age of 65 unless you take up home improvement projects. You can call up at the office of Harris County to know which of the taxing units are offering exemptions to homeowners over the age of 65. You can also get this information by visiting the website the website of the County.
Homeowners with disabilities may be eligible for additional exemptions. Disabilities include physical and mental disabilities that prevent you from gainful employment and also blindness that prevents you from continuing with your job after the age of 55. You automatically qualify for these exemptions if you are receiving disability benefits under the Old Age, Survivors and Disability Insurance Program. Debility benefits under other programs may not make you eligible for exemptions.
If you qualify for exemptions as a disabled homeowner, deductions increase from $20000 to $30000 on the appraised value of your home.
Homestead exemptions for 100% disabled veterans
If you suffer from 100% disability certified by Veterans’ Administration, 100% of the value of your home will be exempted from property tax.
Buying or selling a property receiving homestead exemption
Irrespective of the date on which you buy or sell a home, the taxes are calculated at the end of the year. If the house you have purchased or sold carries a general homestead exemption, this exemption applies for the whole year for the purpose of taxation. The tax assessment will reflect the fact of exemption. The person who buys such a home will need to apply for an exemption to become eligible for tax exemption. HCAD sends a postcard to all homeowners receiving this exemption to confirm that they are still occupants of such properties. If a postcard is undeliverable, it is deemed that the owner is no longer a occupant and the exemption is cancelled. Even if there is a cap in place on the home that you have purchased, the tax you will be asked to pay next year may be substantially higher if the price of the property has increased substantially in the last few years.
Ever year, HCAD prepares a list of properties that were enjoying homestead exemption and were sold to a new owner. This new owner receives an intimation regarding cancellation of the homestead exemption along with a new form of homestead exemption.