How a Homestead Exemption Works (and More!)

Here’s a simple example of how the numbers work: If your home’s tax appraised value comes in at $100,000, and you qualify for a $25,000 exemption (this is the amount mandated for school districts), you will pay school taxes on your home as if it the tax appraised value were only $75,000.

A homestead exemption is a legal provision that can help you pay less taxes on your home. If you own and occupy your home as of January 1st of the year, you may be eligible for the general residential homestead exemption. Exemptions are also available for disabled veterans, seniors over the age of 65, people with qualifying disabilities, and some surviving spouses.

Every county is a bit different so be sure to go to your county’s appraisal district website for more details and forms. Remember, it is FREE to file and you must submit your forms between January 1st - April 30th.

Exemptions available include:

General Residence Homestead Exemption
Person Age 65 or Older (or Surviving Spouse) Exemption
Disabled Person Exemption
100% Disabled Veteran (or Surviving Spouse) Exemption
Disabled Veteran or Survivor Exemption
And Many More . . . .Read on to find out!

General Residence Homestead Exemption

A general residential homestead exemption is available to taxpayers who own and reside at a property as of January 1st of the year. To apply for this exemption, taxpayers must submit a completed application along with a driver’s license or state-issued personal ID certificate that has the same address as the property they are applying for the exemption on.  

Person Age 65 or Older (or Surviving Spouse) Exemption

An over 65 exemption is available to property owners the year they become 65 years old. By state law, this exemption is $25,000 for school districts. Other taxing units may adopt this exemption and determine its amount. This exemption also limits the amount of school taxes you will pay every year to the amount you paid the first or second year you qualified (whichever is lower). This limitation is known as a tax ceiling or tax freeze. So, if you turn 65 this year and qualify for this exemption, your school taxes will not increase above the tax ceiling as long as you do not add any improvements such as a garage or pool to your home. If you do add improvements to your home, the tax ceiling can increase. Tax ceilings are mandatory for school districts, however a county, city, or junior college may also limit taxes for individuals with this exemption if the governing body adopts a tax ceiling.

If you are an over 65 homeowner and purchase or move into a different home in Texas, you may also transfer the same percentage of tax paid to a new qualified homestead. This is known as a ceiling transfer (Request to Cancel/Port Exemptions). It is possible to transfer your tax ceiling for county, city, or junior college taxes if they have adopted a tax ceiling and you move to another home within the same taxing unit.

If a homeowner claiming this exemption passes away and their spouse is 55 or older and continues to own the home, the spouse can continue to hold the exemptions and tax ceiling on the property. 

To apply for this exemption, individuals must submit an application and proof of age. Acceptable proof includes a copy of the front side of your Texas driver's license or Texas identification card. Surviving spouses must provide proof of age of the survivor and proof of death of the deceased spouse.

Disabled Person Exemption

Any person who meets the Social Security Administration standards for disability may be eligible for a special homestead exemption, even if they are not receiving disability benefits. This means that a person has a medically determinable physical or mental impairment that prevents them from engaging in any substantial gainful activity and the impairment is expected to last for at least 12 months or result in death. A person who receives disability benefits under the Federal Old Age, Survivors and Disability Insurance Program could qualify.

Similar to the exemption available for people over 65, an exemption for a person with disabilities provides for a tax ceiling for school taxes. If you receive this exemption and purchase or move into a different home in Texas, you may also transfer the same percentage of tax paid to a new qualified homestead. This is known as a ceiling transfer (Request to Cancel/Port Exemptions). It is possible to transfer your tax ceiling for county, city, or junior college taxes if they have adopted a tax ceiling and you move to another home within the same taxing unit.

To apply, you must submit an application and include documentation of your disability. Documents can include a current copy of your disability determination issued by the Social Security Administration or a statement from your physician verifying your permanent disability. Your physician may use the Physician's Statement Form available through your taxing authority. If submitting a Physician's Statement, an applicant must also provide a copy of a recently filed federal income tax return and corresponding W2s.

100 Percent Disabled Veteran (or Surviving Spouse) Exemption

A disabled veteran who receives 100% disability compensation due to a service connected disability and a rating of 100% disabled or of individual unemployability from the Department of Veterans Affairs can receive an exemption from taxation of the total appraised value of the veteran’s qualifying residence homestead. To apply, individuals must submit an application and current documentation from the Department of Veterans Affairs.

Surviving spouses of veterans who qualified for the 100% Disabled Veteran Exemption or who would have qualified for it at the time of their death are eligible if the surviving spouse has not remarried, the property was the surviving spouse’s residence homestead at the time of the veteran’s death, and the property remains the surviving spouse’s qualifying residence homestead. To apply, individuals must submit an application and supporting documentation.

Disabled Veteran or Survivor Exemption

Texas law provides partial exemptions for property owned by veterans who are disabled. The exemption amount is determined by the percentage of service-connected disability. To qualify, you must be a veteran, a Texas resident, and be classified as disabled with a service connected disability of 10% or more by your service branch or the Veterans Administration. The amount of the exemption may vary from $5,000 to $12,000 depending on documentation from the VA. A disabled veteran who is 65 years of age or older, is blind in one or both eyes, or has lost the use of one or both limbs, may qualify for the maximum exemption of $12,000 regardless of the disability percentage awarded by the Veterans Administration. To apply, individuals must submit an application and documentation from the Department of Veterans Affairs indicating the percent of disability awarded. 

A surviving spouse may qualify for this exemption if they are a Texas resident and have not remarried.

Donated Residence of Partially Disabled Veteran (or Surviving Spouse)

Texas law provides partial exemptions for property owned by veterans who are disabled and who own and occupy homes that have been donated by a charitable organization. The exemption amount is determined by the percentage of service-connected disability. To qualify, you must be a veteran, a Texas resident, and be classified as disabled with a service connected disability of 10% or more by your service branch or the Veterans Administration. To apply, individuals must submit an application and documentation from the Department of Veterans Affairs indicating the percent of disability awarded. 

A surviving spouse may qualify for this exemption if they are a Texas resident and have not remarried.

Surviving Spouse of an Armed Services Member Killed in Action Exemption

The surviving spouse of a member of the U.S. armed services who is killed in action is allowed a 100% property tax exemption on a residence homestead if they have not remarried. To apply, individuals must submit an application, a Report of Casualty, and a copy of your marriage license.

Surviving Spouse of a First Responder Killed in the Line of Duty Exemption

The surviving spouse of a first responder killed in the line of duty is eligible for a 100% property tax exemption on a residence homestead if they have not remarried. To apply, individuals must submit an application, documentation that the spouse was killed in the line of duty, and a copy of your marriage license.

*This information was sourced from Travis County Appraisal District - every county is different so please contact me if you need help or visit your county’s appraisal website.

Contact me if you need help, no matter where you live in Texas.

Rachael V. Peterson
Associate Broker / REALTOR
Aston & Associates
512 695 8923
RVPTexasRealEstate.com
RVPTexasRealEstate@gmail.com