Living where there's no state income tax is a wonderful thing, but tax revenue has to come from somewhere. And in Texas, property tax makes up a big chunk of the state's income. As property owners, we all know our tax bills will come. To make them look a little better, Texas allows for property tax exemptions.
An exemption removes part of the value of your property from taxation and lowers your taxes. For example, if your home is valued at $150,000 and you qualify for a $15,000 exemption, you pay taxes on your home as if it was worth only $135,000. Other than exemptions for disabled veterans or survivors, these exemptions apply only for your homestead. They do not apply to other property you own.
If you want to take full advantage of your homestead exemption, you have to live in (read: own and use as your primary residence) your property by January 1, and that means closing by 11:59 p.m. on December 30. Time to buy in 2013 is getting very short, but a quick closing is still possible if you act now. What kind of savings are we talking about here? Here's a rundown:
School taxes for all homeowners
You will qualify for a $15,000 homestead exemption on your home's value for school taxes.
County taxes for all homeowners
If your county collects a special tax for farm-to-market roads or flood control, you will receive a $3,000 exemption for this tax. If you qualify for local-option exemptions for age 65 or older homeowners, or disabled homeowners (next section), you will receive only the local-option exemptions.
Optional exemptions for all homeowners
Any taxing unit, including a school district, city, county, or special district, may offer an exemption for up to 20 percent of your home's value. The amount of an optional exemption can't be less than $5,000, no matter what the percentage is. For example, if your home is valued at $20,000 and your city offers a 20-percent exemption, your exemption is $5,000, even though 20 percent of $20,000 is just $4,000.
Each taxing unit decides whether it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which you qualify. The taxing unit must decide before May 1 of the tax year to offer this exemption.
Age 65 or older homeowners
If you are age 65 or older, your residence homestead will qualify for more exemptions.
You will qualify for a $10,000 homestead exemption for the school taxes on your home's value, in addition to the $15,000 exemption for all homeowners.
If you qualify for both the $10,000 exemption for over-65 homeowners and the $10,000 exemption for disabled homeowners (see the following section), you must choose one or the other for school taxes. You cannot receive both.
In addition to the $10,000 exemption for school taxes, any taxing unit (including a school district) can offer an additional exemption of at least $3,000 for taxpayers age 65 or older.
Once you receive an over-65 homestead exemption, you get a tax ceiling for that home on your total school taxes. The school taxes on your home cannot increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualify for the over-65 homeowner exemption. The school taxes on your home may go below the ceiling, but the school taxes will not be more than the amount of your ceiling.
Don't be. The Claus Team's expert agents can help you with the ins and outs of filing for your exemptions. And if you want to buy by the end of the year, we're ready to make it happen! We have a line on quick close listings in the area and can get you from contract to close in time to save!