What is the Texas homestead exemption and how can it lower my taxes? Here's what to know.
From understanding how it works to navigating how to qualify for it, here's everything you need to know about a homestead tax exemption in Texas.
Homeowners or prospective buyers in Texas probably have heard of the state's homestead exemptions, which affect property taxes. However, as useful as the exemption can be, it is important to understand how it works to navigate how to qualify for it.
Here's everything you need to know about a homestead tax exemption in Texas:
What is a Texas homestead exemption?
According to the state comptroller's office, the governmental body tasked with collecting state tax revenue, a Texas homestead exemption is, in its most basic sense, a tax break for qualifying individuals.
There are a variety of sections to the homestead exemption. However, the most important is section 11.13(b) of the state’s tax code, which states that public school districts must offer a $40,000 exemption on “residence homesteads” within their districts. That essentially means properties that serve as a primary residence will get this exemption.
Appraisal notices are in the mail.Here's what Travis County residents can expect.
How do you qualify for a homestead exemption?
The general homestead exemption has a very wide qualifying range, and most homeowners should be able to qualify at their primary residence.
The only hurdles for qualification are that an individual must have an ownership interest in the property and must use it as a primary place of residence. This means the exemption cannot be used for a second dwelling or a vacation residence.
“A homestead can be a separate structure, condominium or a manufactured home located on owned or leased land, as long as the individual living in the home owns it. A homestead can include up to 20 acres, if the land is owned by the homeowner and used for a purpose related to the residential use of the homestead,” the Texas comptroller's website says.
How to apply for a homestead exemption
The process for applying for a homestead exemption is generally basic, although some steps can vary in different counties. The steps to apply are as follows:
- Visit the tax appraisal website for your county to find any specific instructions.
- Fill out a copy of the “Application of Residential Homestead Exemption” — or Property Tax Form 50-114 — from your local appraisal district.
- Submit the form to your district — this is where application steps may vary, so pay close attention to what your district requires.
The completed application and required documentation are due no later than April 30 of the tax year for which the homeowner is applying. However, a late application for a residence homestead exemption may be filed up to two years after the deadline has passed.
Texas property appraisals are coming;here's how to protest your latest property valuation
Why are property taxes in Texas so high?
Texas does not have a state income tax, so the state largely relies on property taxes to fund public projects such as schools and roads.
For this reason, Texas looks to tax property owners more heavily as a way of accumulating necessary public funds.
The homestead exemption is one of a handful of tax deductions linked to homeownership. Other exemptions include those for military veterans, people with disabilities and homeowners over 65.
Beck Andrew Salgado covers trending topics in the Austin business ecosystem for the American-Statesman. To share additional tips or insights with Salgado, email Bsalgado@gannett.com.