Understanding the Resident Homestead Exemption in Texas
Are you a homeowner in Texas looking to save on property taxes? Understanding the resident homestead exemption is crucial. Here's a guide to help you navigate through it.
What is the Resident Homestead Exemption?
The resident homestead exemption is a provision in the Texas Property Tax Code that offers homeowners significant savings on their property taxes. It essentially reduces the taxable value of a homeowner's primary residence, known as their homestead, resulting in lower property tax bills.
Benefits and Example:
To illustrate the benefits, consider a home valued at $400,000 with a local tax rate of 2.0%. Without the homestead exemption, the annual property tax would be $8,000. If you qualify for the homestead exemption, which exempts a portion of your home's value from taxation (either a fixed dollar amount or a percentage of the value), your taxable value could be reduced to $300,000. With the same tax rate, your annual tax bill would be $6,000, saving you $2,000 per year.
According to Texas Property Tax Code, a school district (ISD) is required to offer a minimum $100,000 homestead exemption. Other taxing jurisdictions such as counties and cities may offer an optional homestead exemption as a percentage of the value of the property (i.e. a 10%).
How to Qualify and File:
To qualify for the resident homestead exemption in Texas, you must meet certain criteria:
Ownership: You must own and occupy the property as your primary residence.
Residency: The property must be your principal place of residence, meaning it's the one property (if you own multiple) that can have the homestead exemption.
Application: A homeowner must apply for the homestead exemption each time they move their permanent residence because any deed change indicating a change in ownership nullifies an existing exemption.
Filing for the Homestead Exemption:
To file for the homestead exemption, follow these steps:
Obtain the Application: The application form is available on the Texas Comptroller's website or your local appraisal district's website.
Complete the Form: Fill out the application form, providing all required information, such as your property's address, your personal details, and any relevant documentation that proves your eligibility.
Submit the Application: Submit the completed form to your local county appraisal district. This can usually be done by mail, in person, or, in some cases, online.
Along with the application, you must submit a photocopy of a government issued ID. This is most commonly a driver’s license, but can be another type of identification such as a passport. The address on the ID must match the address on the homestead application form.
Confirmation: After processing, the appraisal district will update their website to reflect the property has a homestead exemption. This can take up to three months.. It's important to keep a copy of your application and any correspondence for your records.
Relation to Protest:
A homestead exemption and a protest on the value of a property are completely separate issues. If you are in the process of applying for a homestead exemption, you can also pursue a protest on the value of your property without impacting the exemption.
Generally, a company should not impose fees for reducing a property's taxable value due to the application of a new homestead exemption, unless the exemption was first denied by the appraisal district and later approved following an appeal. Homeowners have the right to contest such denials and may engage a professional for representation.
Exceptions and Notable Points:
One Homestead Exemption: You can only have a homestead exemption on one property, whether it's inside or outside Texas.
Age and Disability Exemptions: There are additional exemptions for those over 65 or disabled, offering further tax relief.
Difference from the 10% Homestead Cap: Unlike the 10% homestead cap, which offers additional taxpayer protection but takes longer to take effect, the homestead exemption applies immediately upon acceptance of your application. You are entitled to a prorated amount of the exemption based on the percentage of the year you owned the property.
In conclusion, understanding and applying for the resident homestead exemption can lead to substantial property tax savings in Texas. If you need further clarification about the benefits of a homestead exemption, don't hesitate to reach out to our company.