Everything You Need To Know About Your Homestead Tax Exemptions (Almost)

If you’re living in Austin Texas you’ve received your 2022 tax bill and it’s time to file you Homestead Exemption. And, there may be other exemptions tied to your property that can save your money. Today we’ll cover:

1. What is this tax exemption?
2. What kind of exemptions do you qualify for?
3. If you qualify then how exactly do you file your exemption?
4. What, if any, changes do you need to know that can save you money?

If you’re wondering if there could be a dryer topic that could save you money… the answer is, well, yes but that’s not what we’re covering today. I promise to make this article  as informative and entertaining as possible. 

The law was updated effective January 1, 2022 which allows all home buyers to be eligible to receive the homestead exemption beginning on the date they obtain ownership. This means that home buyers who purchased a property that did not already have a homestead exemption can now apply for the homestead tax exemption immediately. Ding Ding Ding! This includes home buyers of new construction, properties that were owned by investors, and properties for which the seller had removed the homestead exemption. That’s a benefit that we didn’t have prior to January 1, 2022. That’s money in your pocket if you purchased a home last year.

WHAT IS A HOMESTEAD EXEMPTION

A homestead exemption is a legal tax exemption for homeowners that protects their home, specifically, your “primary residence” by lowering your taxable amount. It also protects the value of your primary residence from creditors.

Here’s the math: If your home is  $750,000 and you qualify for a $30,000 homestead exemption, then you’re only paying taxes as if your homestead is worth $720,000. You can potentially save thousands of dollars a year by being taxed less on your home.

Plus, you’ll feel like a total badass boss bitch knowing you’re saving money and protecting your literal and figurative assets. Who doesn’t love saving money on their taxes? It also protects the value of your primary residence from creditors which is always a plus. And… let’s be honest… who doesn’t love saving money and being protected from creditors? It’s like a double stuffed Oreo back in the day!

Homestead Definition: What it means is that it is a separate structure, condominium, or a manufactured home located on owned or leased land, that is owned by you, the homeowner, as your primary residence. A homestead can include up to 20 acres owned by you, the homeowner, and used as a yard or a purpose related to the residential use.

IMPORTANT HOMESTEAD EXEMPTION REQUIREMENTS

You must own your home and occupy your home as your principal residence on January 1st of the year for which you are requesting an exemption. Looking at this a little deeper there are 3 qualifications for Homestead exemption:

  1. You must own your home as of January 1st.
  2. You must occupy your home as your principal residence as of January 1st.
  3. You have a valid Texas driver’s license or Texas-issued identification certificate that matches your address. This 3rd point can hang people up.

If you want to be a homesteadin’ pro you’ve gotta have all 3 points. No exceptions! Or else you’ll be the one getting taxed, not your home.

WHAT IS THE DEADLINE FOR A NEW HOMEOWNER EXEMPTION?

If you are a NEW homeowner, you must apply for the exemption for the applicable portion of the tax year before the first anniversary of the date the person acquired the property. There is no longer a requirement of applying by April 30 as there was previously. (The April 30 deadline still applies for other types of exemptions.)   

STEPS FOR FILING YOUR HOMESTEAD EXEMPTION

You can apply as early as January 1st and no later than April 30th up to one year after you pay your annual taxes. You will file your homestead exemption in the county where your homestead is located.  

And, regardless of how long you have owned your home, you can file your application online in most counties. If you like to kick it old school, you can still print and mail your exemption application. 

Pro Tip:  If you do choose to go the USPS send it registered so you have proof of filing. No proof of filing = No exemption. Trust me, it’ll save you a headache in the long run. Happy snail mail filing!

HOMESTEAD EXEMPTION REQUIRED DOCUMENTS AND MAILING ADDRESSES 

It’s important to make sure you have all of the necessary documents with the same homestead address before filling out the application for your county’s appraisal district. Then mail all of the documents to the Appraisal District for your county if the online option is not available.

If you can’t file online, you can always snail mail it to the appraisal district office in your county. As mentioned earlier, send it registered mail so you have proof of filing. 

Check out our blog and the links below the video for easy access to the 7 most common Austin-area appraisal district offices.

Along with your homestead exemption, include a copy of your valid Texas Driver’s License or Identification Card. NOTE: The address on your license must match the homestead address. If you needed a kick in the butt to get that license updated, then congratulations, you just received one.

  • Travis County Mailing Address: P.O. BOX 149012, Austin, TX 78714-9012
  • Hays County  Mailing Address: 21001 IH 35 North, Kyle, Texas 78640
  • Burnet County Mailing Address: P.O. Box 908, Burnet, TX 78611-0908
  • Llano County Mailing Address: 103 E. Sandstone St., Llano, Texas 78643
  • Bell County Mailing Address: P.O. Box 390, Belton, Texas 76513

WHAT HAS CHANGED WITH THE HOMESTEAD EXEMPTION?

  • Williamson County increased property tax exemptions in May 2022. The exemptions for homeowners 65 and older or disabled increased to $125,000. 
  • Williamson County also increased property tax exemptions for all homeowners to 5% of their homestead’s assessed value (or a minimum of $5,000). Property owners have to apply for the exemptions for free through the Williamson Central Appraisal District.
  • Proposition 1, passed in May 2022. If you lived in Austin then, you may or may not be happy with that vote.  Prop 1 is cuts school district property taxes for homeowners who are 65+ or disabled. The change will further lower those homeowners’ property taxes (but not eliminate any property tax cap).  I talk about that in our Homestead FAQ video so head over there for details!
  • Proposition 2, passed in May 2022. This raises the state’s homestead exemption for school districts from $25,000 to $40,000. 
  • January 1, 2022 a new law took effect that enables homeowners to file a homestead exemption starting the date they begin living on the property without having to wait until the next calendar year to file.
  • On June 29, 2021, Travis county voted to increase exemptions for seniors and disabled individuals for the fiscal year 2020, raising the exemptions of both from $85,500 to $100,000. 
  • On November 3, 2015, Texas voters elected to increase the homestead exemption for school property tax from $15,000 to $25,000, saving homeowners an average of $125 per year. Glad they finally raised that exemption after 7 years of steady home value increases by a gazillion percent.

THERE ARE A FEW DIFFERENT HOMESTEAD EXEMPTIONS ARE AVAILABLE

Depending on factors such as your age, location, disability, or veteran status, you may qualify for different homestead exemptions, such as: 

  • Disabled Veteran Homeowners Exemptions: First, thank you for your service to our country. We are a better nation because of you. Please Click the appropriate links for more information about exemptions, limitations, and special instructions. Anything our nation can do to make your world better, I’m all for it. 
  • Optional 65 or Older or Disabled Exemptions: There are likely additional exemption amounts. Be sure to claim if you turned 65 last year. Be sure to claim it if you’re 65 or older and moved. It’s not automatic. Repeat. It’s not automatic to receive this exemption. Keep your pesos in your pocket 65+‘ers.
  • School Taxes: All residence homestead owners may receive a Homestead Exemption from their home’s value for area school taxes.
  • County Taxes:  If your county collects a special tax for farm-to-market roads or flood control, you may be able to receive a homestead exemption. Also, If the county grants an optional exemption for  65+ home owners and/or those with a disability, you’ll want to receive the local-option exemption.
  • School Tax Exemption Age 65 or older and disabled exemptions: Individuals 65 and older and/or disabled residence homestead owners may qualify for a Homestead Exemption for school taxes in addition to the exemption for all homeowners. If you qualify for both the exemption for 65+ homeowners and the exemption for disabled homeowners, then you must choose one or the other for school taxes. You or your parents or grandparents in these categories cannot receive both exemptions. Click on the Texas Comptroller link in the blog to read about exemptions, limitations, and special instructions.
  • Optional Percentage Exemptions: Any taxing unit including a city, county, school, or special district may offer an exemption of a percentage of a home’s value. Each taxing unit decides if it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which an owner qualifies. The taxing unit must decide before July 1 of the tax year to offer this exemption.

HOMESTEAD EXEMPTION QUESTIONS – COUNTY APPRAISAL DISTRICT

Contact a legal representative who can help you with your local county tax office questions. Regardless of what county appraisal district you are filing your homestead exemption, the best best best person to help you with the exemption process is a professional. 

I am not that person as I noted at the beginning of this video. So, reach out and get that help. You just might be able to save yourself thousands of dollars. 

What would you do with a couple extra thousand dollars saved in your pocket right now? Write in the comments below. I’d love to know!! Don’t forget to file your homestead exemption if you’re already living in Austin Texas! You have until April 30th.

HOMESTEAD FAQ

Q: Does it Matter When I File My Homestead Exemption After I Close? 

A: File your homestead as soon as you move into your home. It is prorated in the year you purchased, so it could save you some money to file it immediately. Make sure to change your driver’s license to the subject property address ASAP. You need this information to be the same on your exemption AND drivers license for them to accept the homestead exemption.

Q: What Is A Homestead Cap?

Technical Answer: A homestead cap is a cap on the amount of value a property will be taxed from year to year. The appraisal district identifies this amount as the “appraised value.” The beauty of the limitation is that it slows the annual increase of a property tax bill (yay!) by reducing the amount of your home value subject to taxation. For your primary residence homesteads, the annual increase in Austin Texas is limited to 10% more than the previous year’s appraised value and any new improvements.

My Answer: A homestead cap is like the organic cherry on top of a Nada Moo gluten-free sundae with So Delicious Coconut Whipping Cream! The homestead cap is a way to keep your property tax bill from skyrocketing and causing you to go broke. 

The appraised value of your home is determined by the appraisal district and the homestead cap limits your annual increase of that value. In Austin, Texas, the cap is set at 10% for primary residence homesteads. Can I get an amen that your property tax bill can only increase by 10% each year? 

Super Secret: This is especially helpful if you’ve made any improvements to your home because those can often increase your value and, therefore your tax bill. So, if you own a home in Austin be sure to take advantage of the homestead cap and save yourself some money!

PS This message is free. Paying more than your fair share of taxes is anything but free!

Q: When Does The Homestead Cap Take Effect?

Technical Answer: The homestead cap applies the second full year you have your primary residence aka “homestead”. For example, if you bought a home after January 1, 2022, the first full year of homestead is 2023. That means that the 10% cap doesn’t start until the second full year, which is 2024 for a home purchased and occupied after January 1, 2022.

My Answer: Let’s be real, who can keep track of all these rules and regulations? It’s like trying to understand the instructions on an Ikea anything that you wish you never bought. Just kidding. But seriously, make sure to keep track of when your homestead cap starts to take effect or you may end up with a bigger tax bill than you were expecting.

Q: Does A Homestead Cap Transfer?

Technical Answer: Sadly, no. Homestead Caps don’t transfer if the ownership of the property changes. So, if you sell your home and someone else buys it… they won’t be able to benefit from the homestead cap that you had established.

My Answer: Sorry to say that Homestead Caps are like the ultimate one-hit wonders. Kind of like Soft Cell singing Tainted Love in 1981. They only apply to the Owner at the time and can’t be passed on to the next lucky homeowner. So, when you sell your home, the new Owner starts from scratch, they do not pass Go and collect $200. They establish their own homestead cap. But hey, at least you got to enjoy the benefits while it lasted!

PS  You don’t get to take that exemption with you to your next property either. 

Pro Tip: It’s really important to file for the homestead as soon as you move into your new home. It’s prorated in the year you purchased, so if you file it immediately, you could potentially save some money. And don’t forget to change your driver’s license to the new address of your home! Trust me, it’ll make things a lot easier in the long run.

Have Homestead Questions?

If you have any questions about the homestead exemption process in Texas, you can contact a legal representative, the tax office for the county you are filing in, or that county’s appraisal district.

Disclaimer: The information provided in this video or blog does not in any way constitute legal advice. If you are unsure about your homestead exemption qualifications, filing or anything else to do with your Texas homestead exemption, it is best to work with a professional.

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Jennifer S. Goodman
Jennifer S. Goodman
Articles: 165

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