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If you buy a home in Texas in 2022, a new homestead exemption deadline legislation may save you thousands of dollars! Because of the law that went into effect in January of this year, you can now apply for the homestead exemption in the same year you acquire your property! If your residence is your primary home, you don’t have to wait until January the following year to start saving money!
What is the Texas Homestead Exemption?
When you own a home as your principal place of residence, a homestead tax exemption includes these significant tax breaks:
- School taxes: You receive a $40,000 residence homestead exemption from your home’s value for school taxes.
- County taxes: $3,000 exemption for any special taxes.
- Age 65+ and Disabled Exemptions: If you are age 65+ or disabled (or both), you qualify for an extra $10,000 residence homestead exemption on school taxes
- Optional Percentage Exemptions: Any city, county, school, or special district, may offer an exemption of up to 20% of a home’s value. But, no matter what your percentage is, your optional exemption won’t be less than $5,000. The taxing entity adds your percentage exemption to the other home exemptions you qualify for.
- Optional Age 65+ or Disabled Exemptions: An additional exemption amount of at least $3,000 for taxpayers age 65+ and disabled (or both). (1)
- Veterans and Survivors May Qualify for More Tax exemption relief up to the home’s entire value!
How Do I Qualify for Texas Homeowner Exemptions?
To qualify for the general residence homestead exemption, you must meet a few requirements, including:
- Ownership interest in the property
- You must use the property as your principal residence.
- You must state that you don’t claim an exemption on another residence homestead in or outside Texas.
You’ll also need proof that the property is your address, such as a driver’s license with your new address and utility bills.
New Texas Homestead Exemption Deadline 2022 Law
The Texas homestead exemption deadline is when you must file your paperwork to receive the tax break for that year. In 2021, if you did not file by the deadline, you lost the chance to file for an exemption that year.
However, as of January 2022, you can file for the homestead exemption at any time during the year! No longer must you wait until January of the following year to apply for the homestead exemption!
However, if you buy a home in 2022, you can file the exemption after the deadline! You can still receive the money for that year’s exemption! This little-known secret is the key to possibly thousands of dollars in tax relief!
The fact is, you can file a late residence homestead exemption application up to two years after the delinquency date! You will get a new tax bill with a lower amount when you file. Or, you receive a refund if you already paid! (1)
When You Can’t File
If you close on a home in 2022, you may claim the homestead exemption for that year as long as the previous owners did not claim it for that year. You can find out if the previous homeowner claimed the exemption for the year by talking with the appraisal district office.
How the New 2022 Exemption Laws Can Help You
According to SmartAsset, “The state of Texas has some of the highest property tax rates in the country. In Harris County, the most populous county in the state, the average effective property tax rate is 2.03%. That’s nearly double the national average of 1.07%.”
So, as an example of how the homestead exemption new law works, let’s say you buy a home on March 1 of 2022 for $350,000. The appraisal board sets your home’s value at $350,000, and your tax rate is 2%. You forget to file for the homeowner’s exemption before the 2022 deadline.
However, with the new law, you can still file for the exemption!!
So for 2022, you might owe $7,000 in taxes for a whole year without a homestead exemption. But since you only live there for 10 months in 2022, you might owe a prorated $5,833 in taxes without a homestead exemption.
However, if you receive the homestead exemption, your home’s value reduces by $40,000 to $60,000 (depending on the exemptions passed out for 2022 in your appraisal district).
Watch What Happens When You Receive the Homeowner’s Exemption
So, let’s say your home appraises at $350,000, but your homestead tax exemption reduces the value to $290,000. In that case, your taxes drop to $5,800 for a whole year.
Since you moved in March, your prorated taxes for 2022 are $4,833 with the homeowner’s exemption. If you already paid, you will get a refund for $967.
So if you buy a home in 2022, filing for the homestead exemption for the year 2022 is worth it! Close to a thousand or more may wait for you!
We Can Help
Whether you need help protesting your appraisal district tax or applying for the homestead tax exemption, at Jarrett Law Firm, we have you covered! We specialize in real estate law and have helped thousands of homeowners in the Houston area with mortgage contracts, short sales, foreclosures, and more! Schedule a consultation with us today to see how we can help you