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Published on: 07/15/2023

Who Qualifies for Texas Homestead Exemption?

For Texas homeowners, the homestead exemption can provide a significant tax break, that is if they meet the criteria outlined by the state. So, exactly who qualifies for Texas homestead exemptions?

Generally, the homestead exemption is available to any person who owns and occupies a residence as their primary home in Texas. This includes homeowners who own single-family residences, condominiums, townhouses, or mobile homes. 

In this article, we will discuss the eligibility criteria for the homestead exemption in Texas. We will also cover the specifics of how to apply for an exemption and lay out who qualifies for Texas property tax exemptions.

Does Texas have homestead exemptions?

The short answer is yes. Homestead exemptions are available in Texas and they can offer significant tax savings for homeowners who qualify.

The homestead exemption in Texas is a legal tax exemption that reduces the taxable value of a home for property taxes, allowing homeowners to save some money. The exemption amount varies depending on where you live in Texas and the value of your home.

In addition, there are other types of exemptions available to homeowners in Texas, such as the Over 65 Exemption and Disabled Person Exemption. These exemptions can provide even greater tax savings.

What are the types of homestead exemptions in Texas?

There are various types of homestead exemptions available to Texas residents. The exemptions available to you will depend on your county, the value of your home, and other factors.

The most common homestead exemptions in Texas include the following:

  • General homestead exemptions: The general residence homestead exemption is for any residential property used as a primary residence. It typically reduces the taxable value of a home by up to $40,000.
  • School tax exemptions: School taxes can also be reduced through homestead exemptions. These exemptions depend on the value of the home and the school district where it is located. However, all Texas resident homestead owners are allowed $40,000 residence homestead exemptions from their home’s value for school taxes.
  • County tax exemptions: County taxes are based on the value of the home and the county it is located in.
  • Age 65 or older and disabled exemptions: As can be assumed, this exemption is available to those over the age of 65 or to those with a disability or mental illness who own and occupy the residence as their primary home. The amount of this exemption varies depending on the disability and the county in which you live.
  • Optional percentage exemptions: A taxing entity, such as a city, county, school, or special district, has the authority to provide a deduction of up to 20% on the assessed value of a residential property. However, regardless of the chosen percentage, the minimum amount for this discretionary deduction cannot be lower than $5,000. Each taxing entity has the autonomy to determine whether it will grant this deduction and at what percentage.
  • Optional age 65 or older or disabled exemptions: For homeowners over the age of 65 and those who are disabled, an additional exemption of at least $3,000 may be available.

To learn more about the specifics of Texas homestead exemptions or to determine whether you qualify, contact a financial advisor who offers tax planning strategies and who can help you determine what tax strategies best suit your overall financial plan.

Who qualifies for Texas property tax exemptions? 

In general, any person who owns and occupies a residence as their primary home in Texas is eligible for the homestead exemption. More specifically, those who qualify for Texas homestead exemption include:

  • Principal residents of single-family residences, condominiums, townhouses, or mobile homes (may not be a corporation or business entity).
  • Property must have been used as the primary residence as of January 1st of the tax year applied for.
  • Property must be owned by the person applying for the exemption.
  • The property owner must have a valid Texas driver’s license or voter registration card.
  • Persons over 65 may qualify for an additional exemption if they meet certain criteria.
  • Those with disabilities may also qualify for an additional exemption based on their level of disability.
  • Owners of mobile homes that are permanently affixed to land owned by the taxpayer also qualify for the exemption.
  • Certain Veterans of the United States Armed Forces may be eligible for a homestead exemption as well.

Based on this criteria, if you are investing in real estate vs. the stock market and are looking for ways to lower your tax bill, then the homestead exemption will not be a benefit to you unless you are living in the investment property. However, there may be other strategies you can use to minimize your tax burden.

Continue reading: Is rental property a good investment for retirement?

Do you have to file a homestead exemption in Texas every year?

In most cases, homeowners must file for a homestead exemption each year in order to receive the tax savings. Each county sets its own rules and deadlines for filing, so make sure you check with your local county tax office for specific information and guidelines on how to apply.

It is important to note that if you do not qualify for the exemption or fail to file for it in time, you could be liable for any taxes due on the property. Therefore, it is important to make sure that you understand the eligibility criteria and filing requirements in order to take advantage of this valuable tax benefit.

Wondering whether the homestead exemption could complement your tax strategies? Let’s talk.

If you are searching for ways to save on your taxes, a homestead exemption in Texas can be an effective way to reduce your tax burden. To qualify for a homestead exemption, homeowners must own and occupy the home as their primary residence as of January 1st of the tax year applied for and they must be a resident of the state of Texas.

Looking for additional ways to incorporate tax strategies such as this into your financial plan? Avidian Wealth Solutions can help. We are a fiduciary firm offering tax planning in Houston as well as high-net-worth tax planning in Austin.

We can help with everything from defining who qualifies for Texas homestead exemptions to incorporating estimated tax on a real estate sale into your financial plan. To learn more about our tax planning services, schedule a conversation with us today.

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