Explanation of Tax Exemptions
Certainly, we all pay our fair share in taxes, including property tax if you are a homeowner. But are you paying more than your fair share? If you qualify, you can save hundreds, maybe thousands, of dollars more than you have to every year – but YOU MUST APPLY!
Property tax in Texas is a locally assessed and administered. There is no state property tax. Property tax brings in the most money of all taxes available to local government to pay for schools, roads, police and firemen, emergency response services, libraries, parks and other services provided by the city and county.
The following categories of property tax exemptions are available through your local county appraisal district based upon your qualification. Some of these exemptions can be combined; however, there are restrictions as noted. Also, there are some exemptions that can eliminate property tax payment for life, for instance for the surviving spouse of a military service member or first responder killed in the line of duty.
General Homestead Exemption - Virtually all residential property owners in the State of Texas qualify for a General Homestead Exemption on their property taxes which:
- Requires school districts to offer a $25,000 exemption on residence homesteads
- Allows any taxing unit the option to decide locally to offer a separate residence homestead exemption of up to 20 percent of a property's appraised value. The local option exemption cannot be less than $5,000.
- Requires counties that collect farm-to-market or flood control taxes to offer a $3,000 residence homestead exemption.
Qualifications: There are no specific qualifications for the general homestead exemption other than:
- Ownership interest in the property – typically the property owner that
- Uses the property as the owner's principal residence
- required to state that he or she does not claim an exemption on another residence homestead in or outside of Texas.
A recent change in the law that became effective January 1, 2022, makes homebuyers eligible to receive the homestead exemption beginning on the date they obtain ownership. This change now permits homebuyers, who purchase a property that does not already have a homestead exemption, to apply for the exemption immediately.
A new homeowner must apply for the exemption for the applicable portion of the tax year before the first anniversary of the date they acquired the property. If the new owner qualifies to receive the exemption prior to January 1 of the following year, the taxing units will recalculate the amount of tax due and correct the tax roll. If the tax has already been paid, the excess amount will be refunded. All other qualification requirements still apply.
Inherited Residence Homestead - Heir property is property owned by one or more individuals where:
- At least one owner claims the property as a residence homestead
- The property was acquired by will, transfer on death deed, or intestacy
Qualification: (when not specifically identified as the residence homestead owner on a deed or other recorded instrument in the county where the property is located must provide the county appraisal district:
- an affidavit establishing ownership of interest in the property
- a copy of the prior property owner's death certificate
- a copy of the property's most recent utility bill; and
- a citation of any court record relating to the applicant's ownership of the property, if available.
An heir property owner should record their interest in the heir property in the county where the property is located with the local county clerk.
Over 65 Exemption – the Tax Code provides an exemption for persons 65 and older and:
- Requires school districts to offer an additional $10,000 residence homestead exemption
- Allows any taxing unit the option to decide locally to offer a separate residence homestead exemption. This local option exemption cannot be less than $3,000.
Qualification:
- Property owner must be age 65 or older and live in the house
- If the age 65 or older homeowner dies, the surviving spouse may continue to receive the local option exemption if the surviving spouse is age 55 or older at the time of death and lives in and owns the home; however, they must apply for the exemption as it will not automatically roll over to them.
Disabled Exemption – the Tax Code provides an exemption to disabled property owners, similar to the Over 65 exemption:
- Requires school districts to offer an additional $10,000 residence homestead exemption
- Allows any taxing unit the option to decide locally to offer a separate residence homestead exemption. This local option exemption cannot be less than $3,000.
Qualification:
- The disabled property owner must meet the definition of disabled for the purpose of receiving disability insurance benefits under the Federal Old-Age, Survivors and Disability Insurance Act
- Eligible disabled persons aged 65 or older may receive both exemptions in the same year, but not from the same taxing units.
Contact your local county appraisal district (CAD) for more information on how to apply for these exemptions from different taxing districts or authorities.
Surviving Spouse of First Responder or Military Service Member – the Tax Code provides the following property tax exemption:
- A total property tax exemption for the residence homestead of a surviving spouse of a first responder or military service member killed or fatally injured in the line of duty
- If the surviving spouse has not remarried since the first responder’s death.
- Applies regardless of the date of the spouses’ death.
- The surviving spouse if eligible for the exemption may qualify a different property as a residence homestead and is entitled to the same dollar amount of the former exemption that was last received at the former homestead.
Qualification:
- A surviving spouse, not remarried, of a fire fighter, law enforcement officer or military service member killed in the line of duty or died from injuries received in the line of duty.
Veterans Exemption – the Tax Code provides partial to full property tax exemptions for any property owned by disabled veterans, surviving spouses and children of deceased disabled veterans
- A disabled veteran who receives 100 percent disability compensation due to a service-connected disability and a rating of 100 percent disabled or of individual unemployability to a total property tax exemption
- Extends to a surviving spouse who was married to a disabled veteran who qualified or would have qualified for this exemption if it has been in effect at the time of the veteran's death
- A partial exemption for residence homesteads donated to disabled veterans by charitable organizations that also extends to surviving spouses who have not remarried. The amount of exemption is determined according to percentage of service-connected disability.
Qualification:
- the surviving spouse has not remarried;
- the property was the residence homestead of the surviving spouse when the veteran died
- the property remains the residence homestead of the surviving spouse.
Check with your local county appraisal district (CAD) regarding specific application forms and criteria.
Solar and Wind-Powered Energy Devices – the Tax Code provides an exemption for these energy saving devices installed on a qualified property owner’s property.
- The Texas State Comptrollers’ office assists local officials in the administration of the exemption for solar and wind-powered energy devices
- Application for this exemption is Form 50-123,Exemption Application for Solar or Wind-Powered Energy Devices.
Charitable Organizations and Businesses - several exemptions are available for charitable organizations and businesses. Refer to the Comptroller's publication “Texas Property Tax Exemptions” for more information. Most of these exemptions have specific application forms that can be found through this link.
BOTTOM LINE
This information is provided by the Geni Manning Group for your information as a Public Service and no claim of accuracy or inferred qualification of any individual is made. Interested persons are encouraged to contact their local County Appraisal District for specific guidance and forms or documentation required to make application for any of the above exemptions.
If you qualify any one of these exemptions, you can potentially save some money on your property taxes anywhere from hundreds to possibly thousands of dollars per year. If you purchased a home and not completed the application for a General Homestead Exemption you are encouraged to apply, if you qualify.
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