Your Guide to the Texas Homestead Tax Break

If the financial burden of buying a home has you running for the hills, you might want to think again – especially if you live in Texas. As rent prices continue to rise across the nation, buying a home in North Houston can be a more affordable option for many. And while homeownership does come with its costs, like maintenance, repairs, and taxes, it’s probably not as expensive as you might think. In fact, the state makes sure of that!

Thanks to what’s called the “Homestead Exemption,” Texas residents can catch a serious break on their property taxes – just for simply owning a home.

Here’s how it works:

• If your property qualifies as a homestead, meaning it’s your primary residence, you get at least a $25,000 exemption on your property taxes – this is for the school taxes in your area. Depending on where you live, there may be other exemptions you are eligible for. (See below)
• Take the appraised value of your home (say your appraiser deemed it worth $200,000), and subtract your exemption. In our example, that means your home has a value of $175,000, pre-tax.
• When it comes time to pay property taxes, you pay taxes only on that $175,000 value – not the full $200K.

While this may only save you a few hundred dollars each year, if you’re in a home for many years, the savings really start to add up. If you’re eligible for other exemptions, it could be even more.

Other exemptions include:

• $3,000 for county taxes – If your county collects special taxes, like those for FM roads, flood control, or other protective measures, you can also deduct $3,000 from your home’s value before taxes.
• $10,000 for seniors and disabled persons – If you are 65 or older or suffer a disability, you can deduct $10,000 from your home’s pre-tax value.
• Varied amounts from other taxing units – City, county, schools or special districts in your area can also offer individual exemptions of up to 20 percent. You’ll want to check with the city and county to verify any special exemptions your home may qualify for. These districts can also offer additional exemptions for senior citizen and disabled persons.

To qualify for a homestead exemption, you must:

• Have owned your property on Jan. 1 of the current year
• Occupy the property as your primary residence
• Have not claimed a homestead exemption on any other property

To file for a Homestead Exemption, you must fill out the documents as provided by the appraisal district in your county of residence. Be sure to include a copy of your driver’s license or legal ID card. You must apply between Jan. 1 and April 30 of the current year.