We are kicking off the New Year with a bang, every time a new year comes around, it's time to discuss homestead exemptions here in Texas. Saving money is one of our favorite topics! The homestead exemption can save you a lot of money on property taxes on your primary residence. If you haven't heard of this term before or aren't clear on how it applies to you, listen up! This will be especially valuable if you bought a home in 2021 or planned to buy in 2022, as there are several updates that were made to Texas homestead laws this year. Let’s get started!
What is a Homestead Exemption
Here in Texas, it's a property tax break on your designated primary residence, the house that you live in and does not apply to secondary homes or if it’s owned by a corporation. Each resident could qualify for an exemption on their home's value for school taxes. This amount depends on your city, county, and local government tax law; meaning one house in Dallas the homestead exemption could be different from a house in Plano.
When to File for Your Homestead Exemption
As soon as you buy a house, you're immediately eligible for the exemption. Your homestead exemption is going to apply to the part of the year that you owned your home. You need to get it on file with the county. There are some other qualifying rules to your homestead and the details are going to be on your county's website, but truly it is generally very simple.
How the Homestead Exemption is Valued
Essentially, the exemption lowers your home valuation in the eyes of your taxing district, so the amount that you're being taxed on is lower. Therefore, your taxes will be lower. So, for example, if a home is valued at $100,000 and you qualify for a $25,000 exemption, you would only be charged your school taxes on an amount of $75,000.
The value of your home to the tax district has very little to do with what your home would sell for on the open market. We want the tax appraisal to be low and your appraisal for selling high. This is going to be key as we talk about homestead exemptions. We're going to talk a little bit later this year about protesting property taxes. This is going to be the same idea. The tax district has their own appraisers. They can't see the insides of your home. All they know are the permits that are being pulled and what your house has most recently sold for. Typically, your tax appraisal district has a value that is much lower than what you would sell your home for.
FAQ Homestead Exemptions
Does a low tax appraisal impact the value of my home?
No! This is entirely separate from your home's appraised value.
What does it cost to file?
Nothing! Don’t be fooled by spam mail after you buy your home telling you it’s $50 to file.
What if I forget to file the first year?
Historically if you forget to file the first year, there is a two year grace period, but that is subject to change.
Do I need to file every year?
Nope! When you move, go online to change your address and your driver's license, then go file your homestead exemption. It’s one and done as long as you're in the same house.
Are there any additional exemptions?
Yes! There are additional exemptions if you're older than 65, if you have a disability or are a veteran.
We Won’t Let You Forget to File!
We're here to help you, and we're going to hold your hand and push you to get this done!. If you're not in Dallas, make sure you look into your local laws with your taxing authority and set yourself some reminders on what you need to do to be able to get this filed. Huge congratulations if you bought a home last year or if you're looking forward to buying one this year! Our goal is just always to equip you, so filing a homestead exemption is easy and it is worth your time to save major money on your property taxes. If you're in DFW don't forget to go to WhereWeLivePodcast.com to download our free one pager on how to file in our local counties.
We are here to help, no matter what stage of homeownership you are in!
Until Next Time,
Brianna & Keelie