Homestead Exemption FAQs: What You Need to Know
Here comes another year and another round of paying our taxes! But did you know that there is a legal workaround to reducing the taxes you are required to pay, especially in real estate? Homestead exemptions exist, and you can make use of them to help you potentially save thousands of dollars annually.
Homestead exemptions work by removing a certain value of your home from taxation, leading you to pay lesser taxes as compared to paying your dues without one. However, homestead exemptions require you to meet certain qualifications before you can actually become eligible for the said deductions. Here are some quick facts you need to know about Homestead Exemption:
What are Homestead Exemptions?
A homestead is an individual structure, condominium, or manufactured home situated on owned or leased land which is currently occupied by the owner. Homestead properties can be as large as 20 acres, so long as the land is legally owned by the current occupant and is being used as a yard or related residential purpose of the homestead.
What kind of homes qualify for Homestead Exemptions?
Homestead exemptions only apply to homes occupied by the homeowner. Called principal residences, these are owned by individuals (not corporations or business entities), and are used as the owner's principal residence on January 1 of the tax year when the application is filed. However, applicants aged 65 or older no longer need to satisfy the ownership and residency requirements by January 1, as these are no longer required for the age 65 Homestead Exemption.
Are homeowners entitled to tax breaks from property taxes?
Approved homestead exemption applications on principal residences entitles owners to have a portion of their home value removed from taxation so taxes, consequently, can be lowered. Example: For homes appraised at $100,000 and with a $25,000 qualified exemption (the amount mandated for school districts), the school taxes due on the home will be calculated based on the home being valued at $75,000. Taxing units can also allow a separate exemption.
What are the other options for Homestead Exemptions?
Aside from school taxes, you can also receive any of these types of exemptions:
- County taxes
- Exemptions for disabled veterans
- Exemptions for taxpayers aged 65 or older, and;
- Optional percentage exemptions, as decided on by a taxing unit
When can I apply for Homestead Exemption?
Your home must qualify as a residence homestead on January 1 of the year in which you are applying. Strictly speaking, you can apply for a Homestead Exemption from January 1 to April 30.
What are the requirements for Homestead Exemption application?
1. By January 1 of the year of your application, you must be the legal owner of the property being applied for Homestead Exemption
2. By January 1 of the year of your application, the property being applied for Homestead Exemption should be your principal/primary residence (meaning you live in it and NOT leasing it out to others, or for any other purpose).
3. Submit a complete set of required documentation showing THE SAME HOMESTEAD ADDRESS. Homestead exemption applications can be denied with a simple error such as mismatched addresses in the papers submitted.
4. Fill out the application form for your area's County Appraisal District. Travis Country residents can download the application form here.
5. Attach a copy of your Driver's License issued by the Texas Department of Public Safety (TX DPS) or a valid Identification Card having a listed address that matches the homestead address you are applying for.
6. Mail all of the documents to your County's Appraisal District.