How Do Homestead Exemptions Work in Houston, TX?

As a homeowner, you face the hidden expenses of taking care of your Houston home, such as unexpected repairs or improvements in energy efficiency. In addition to these costs, local property taxes can really hit your bank account hard. This is why it’s important to take advantage of any opportunity to pay fewer taxes year to year.

There are many tax exemptions that homeowners in Houston and throughout Texas can benefit from. While a tax specialist can tell you more about which exemptions may apply to you, one important tax break that you should learn more about is the residence homestead exemption.

What Is a Homestead Exemption?

Residence homestead exemptions are described in Section 11.13(b) of the Texas tax code. This section requires every public school district in the state to offer a $40,000 exemption to any owner of a “residence homestead” within their district.

Similarly, Section 11.13(n) allows taxing authorities to offer a 20% exemption for residential homesteads of at least $5,000. Section 11.13(a) applies specifically to districts that collect flood control or farm-to-market taxes. Under this section, the exemption is $3,000. Luckily for Houstonians, Harris County residents are eligible.

To understand more fully how the Section 11.13(b) exemption works, it can help to look at a hypothetical example. Imagine you own a home assessed at $200,000. Because you can deduct $40,000 with the residence homestead exemption, you can expect to pay taxes on a home value of just $160,000.

Depending on the actual value of your home, this exemption could save you hundreds of dollars on your taxes each year. If you qualify for other exemptions under the tax code laws, you could save even more. As a homeowner, it’s important to stay alert to new changes in the tax code that could potentially save you even more on your taxes.

What Is a Homestead Tax Ceiling?

The state recognizes that many senior homeowners live on a fixed income and may not be able to afford tax increases. For this reason, the state instituted a tax ceiling that prevents school taxes from rising for seniors.

The senior tax ceiling only applies to your primary residence; it won’t apply to a rental or vacation property.

The property taxes you pay when you turn 65 will remain the same throughout your life. However, you must apply for this tax for it to take effect. Your taxes can rise beyond the tax cap if you make significant improvements to your home, such as a new addition.

What Is the Harris County 10% Homestead Cap?

The 10% homestead cap in Harris County limits how much your taxes can increase within a 12-month period. It uses your first year’s appraisal by the tax assessor as a base. After the first year, the taxable value of your home cannot increase more than 10% each year.

For example, imagine that when you bought your home in 2020, it was appraised at $300,000. The next year, the county tax assessor reported that it was now worth $400,000.

Due to the 10% homestead cap, you would not pay property taxes for a $400,000 home. Instead, you would pay as if your home were worth $330,000 (10% more than $300,000).

Who Can Get a Homestead Exemption in Houston?

Residence homestead exemptions only apply to those who live in the home as their principal residence. To qualify for the exemption for a particular tax year, you must be living in the home as of January 1. If you have bought your home from another individual who was using the exemption, you might still be able to apply their exemption within that same year.

You must also meet the deadline for filing for your exemption. You cannot file sooner than January 1st, and your application must have a postmark dated no later than April 30th. If your application is late, you won’t qualify for that year.

Houston homeowners who qualify for a residence homestead exemption should also qualify for a homestead cap, but it will not take effect until you have occupied the home for one year. The first home appraisal will serve as the base for future homestead caps, so you should expect your first year’s taxes to be higher than the previous owner’s.

The Over 65 Exemption

There are several additional exemptions that you can claim as a homeowner once you turn 65 years of age. You don’t have to turn 65 by the first of the year to qualify. As long as you turn 65 within the calendar year, you can apply for these exemptions.

Every Texas school district offers a $10,000 exemption to homeowners who are 65 and older. This senior property tax exemption is in addition to the $40,000 residence homestead exemption that also applies to senior citizens, totaling $50,000 in exemptions. You may also qualify for an additional $3,000 exemption. Contact the Harris County Appraisal District to find out.

The Disability Exemption

For tax purposes, Texas considers you disabled if you are unable to work due to a medically determinable physical or mental impairment, and the impairment is expected to last for at least one year. The tax code operates under the same standards used by the Social Security Administration to determine disability status. If you qualify for disability benefits, you may qualify for disability exemptions.

Even though you might receive other disability benefits, you will not automatically receive the homestead exemption—you must apply specifically. You will receive a $10,000 exemption on school taxes and the additional $40,000 exemption as a homeowner. You may also qualify for a $3,000 exemption, and the homestead tax ceiling will apply to you even if you are under 65.

The Military Exemption

The 100 Percent Disabled Veterans Homestead Exemption is exactly what the title implies. If you have a 100% disability rating from the VA, you will be exempt from property taxes.

If you are a veteran with a service-connected disability but are not 100% disabled, you could qualify for a homestead exemption ranging from $5,000 to $12,000.

Spouses of service members who died in the line of duty will also qualify for homestead exemptions if they have not remarried. The filing deadline for these exemptions is April 30 of the applicable tax year, although there are exceptions.

What Types of Homes Can Get a Homestead Exemption?

The homestead exemption applies to any residential structure with a few limitations. It applies to new construction homes as well as older homes. These include manufactured homes, condos, and traditional houses built on owned or leased land.

You may also own an acreage home up to 20 acres of land and still qualify, as long as the land is not used for commercial purposes.

The primary stipulation is that you must use the home as your primary residence. You can temporarily relocate for up to two years as long as you maintain ownership of the property and don’t establish residency elsewhere.

How Much is a Homestead Exemption in Houston?

There are several different types of exemptions available under the homestead section in the Texas tax code. The primary exemption is $40,000 with additional $5,000 and $3,000 exemptions available under qualifying conditions.

A Houston tax professional can provide information specific to your situation to help you determine how much you can claim in exemptions altogether.

Types of Homestead Exemptions in Harris County

There are many different types of exemptions that homeowners may be able to claim. Whether these exemptions apply to you will depend on your specific circumstances. You can review the following types of exemptions to learn more about the tax savings that you may be able to use.

School Taxes

The school tax exemption was previously discussed and is currently valued at $40,000. Make sure to follow changes to the tax law. For example, new legislation in 2022 increased the exemption from $25,000 to $40,000.

County Taxes

Some counties in Texas charge special taxes for maintaining farm-to-market roads and for flood control. Since Harris County does charge these taxes, homeowners are eligible to claim a $3,000 tax exemption.

Age and Disability Exemptions

Even if you don’t turn 65 or qualify for disability by the first of the year, you can still claim the $10,000 exemption. This is above and beyond the base $40,000 that you’ll qualify for as a homeowner in Houston. Even if you buy your home during the year, you can still qualify for that exemption during the same year.

You might also qualify for an additional $3,000 as a senior or disabled homeowner.

Additional Homeowner Exemptions

You might also qualify for a 20% exemption on your home under Section 11.13(n). This exemption provides a minimum amount of $5,000 in tax savings.

Partial Veterans Exemptions

If you are a disabled veteran and don’t qualify for the 100% exemption, you may still be able to obtain some tax relief. In addition, the surviving spouse and children of disabled veterans can qualify. A percentage value assigned to the veteran’s disability will be the basis for calculating the amount that the veteran or family member can claim.

The spouse of a deceased veteran can apply for this exemption by submitting the relevant application. The spouse or children will receive the exemption based upon the disabilities sustained by the veteran at the time of their death.

Exemptions for Surviving Spouses

The surviving spouse of a military service member or first responder can file for an exemption. This is a 100% tax exemption. The service member must have died in the line of duty or as the result of injuries sustained during active duty. Surviving spouses cannot claim these exemptions if they remarry.

How to Claim a Houston Homestead Exemption

You can find specific information for applying for the exemption and download a homestead exemption application on the tax appraisal website for Harris County.

Look for a document titled “Homestead Exemption” and download it. You’ll provide your personal information and details about your residential home on this application.

Be prepared to provide copies of the documents requested to assess your eligibility. You might need to submit copies of your driver’s license, home title, or other relevant paperwork. Make sure you include everything that’s requested by the tax appraisal office.

You should receive a confirmation letter within 7 to 10 business days. If you don’t get that letter, you should contact the tax appraisal office. They can verify that they are processing your application. If not, you may need to resubmit your application.

Do I Have to Apply for a Homestead Exemption Every Year?

You do not need to apply for the residence homestead exemption every year. However, you will need to reapply if the chief appraiser sends you a new application. You will also have to reapply if you move.

What’s the Deadline to Apply for the Homestead Exemption?

You can submit your exemption application between January 1 and April 30. The tax appraisal office will not accept applications for exemptions early. They will deny exemption requests postmarked late as well. For this reason, keep track of your application’s progress.

Harris County Homestead Application Form

You can find the Residence Homestead Exemption Application on the website for the Harris County Appraisal District. When you arrive on the page, you can enter your information directly and submit the application online. Alternatively, you can download and print the form via your home printer.

This form will allow you to apply for all of the exemptions mentioned in this overview. If you must submit additional documentation, such as a copy of your driver’s license, the tax appraisal office must receive it within 30 days. Some people find it easier to print the application and submit it together with their documentation.

What Happens If You Sell a Home with a Homestead Exemption?

If you are under 65 and sell a home with a homestead exemption, the tax credit stays in place for the remainder of that year. However, it gets disqualified if the Harris County Appraisal District’s appraisal verification postcard gets returned as undeliverable. The postcard verifies that, as the owner of record, you are still occupying the home.

If you are over 65, the homestead exemption will remain in place for that year. This allows the buyer of your home to use that exemption for that year, but they must apply for their own exemption in the following year.

Homestead Exemptions Help Every Homeowner Pay Lower Taxes

While tax laws can be complex and frustrating, learning more about them can help you pay lower taxes each year. This is especially true when it comes to homeowners. Since you will likely spend money on the upkeep of your home, getting these tax breaks will help compensate for those hidden home ownership costs.