Homestead Exemption Texas

11 Replies

Hello everyone,

I'm relocating to Texas on order (active duty) and am about to purchase a SFH which I intend to live in. Can I file Homestead Exemption for this property given I get Texas driver's license? What would happen when I get order to relocate again? Will I have to remove that exemption if I'm renting that property out?

Any advise would be appreciated!

Daniel A Lee Kim. YES - You can get Homestead Exemption on your Texas Property while living in Texas.
If you subsequently rent the property you will eventually lose the Homestead Exemption.
I would recommend you claim Texas as your Home Of Record for the balance of your Military Career as Texas has no income Tax.

512-633-3853

@Jim Cummings thank you for the information.  My home of record is actually Florida so I’m exempt from state tax already.  So even if I switch, will the homestead exemption expire once I move? 

On the form it says you can only claim it if you have lived in the property since Jan 1.  Wondering if they would pro rate it?

@Daniel A Lee Kim .  YES - I would think the Exemption will be eventually removed as sooner or later, someone at Tax Authority will make the connection your Address for Tax Purposes is NOT the same address as the Homestead Property.

According to the rules for filing for Homestead Exemption - you must OWN & LIVE in the Property on January 1 of the year you file for Homestead Exemption.  For Example, you bought the Home and took possession on December 31, 2017 - you meet the basic requirement for filing for a Homestead Exemption in 2018. If however, your Closing was delayed until January 2, 2018, you do NOT meet the requirement to file for Homestead Exemption as you did not OWN & LIVE in the property as of January 1, 2018. 

There is NO Proration of the Exemption. You either live there on January 1 and are eligible for the Exemption, or you don't live there on January 1 and are NOT eligible. I think the reason for January 1, is that date is used by the Taxing Authorities as the date for determination of Taxable Value.  

Once you receive a Homestead Exemption, you DO NOT have to refile for the Exemption in subsequent years. It's considered Permanent until you no longer live in the property.

512-633-3853

There is no pro-ration of the homestead exemption. You must own and occupy the property on Jan 1st to get the benefits for that year. So if you purchase during 2018 , your benefits would not kick in until 2019

While saving +-$500 per year depending on the tax rate is nice , it shouldn't be a critical factor in your decision to purchase 

512-293-3885
Originally posted by @Greg H.:

There is no pro-ration of the homestead exemption. You must own and occupy the property on Jan 1st to get the benefits for that year. So if you purchase during 2018 , your benefits would not kick in until 2019

While saving +-$500 per year depending on the tax rate is nice , it shouldn't be a critical factor in your decision to purchase 

Legally I think she is supposed to notify them if she ends up moving back out of state, correct?  We have only switched homestead to homestead within the state.  Just filing the Homestead on a new texas property will remove the old one. 

@Bart Hedgcock

Correct. I believe the homestead exemption for the military can only stay if they are transferred(PCS) overseas 

512-293-3885
Originally posted by @Greg H.:

There is no pro-ration of the homestead exemption. You must own and occupy the property on Jan 1st to get the benefits for that year. So if you purchase during 2018 , your benefits would not kick in until 2019

While saving +-$500 per year depending on the tax rate is nice , it shouldn't be a critical factor in your decision to purchase 

It is alot more than $500.  Remember that not only do you get the exemption with homestead the homestead caps the taxing authority from raising you rates every year to market.  My house is currently being taxed at almost 100K less than market due to homestead.

Originally posted by @Chris Lynch :
Originally posted by @Greg H.:

There is no pro-ration of the homestead exemption. You must own and occupy the property on Jan 1st to get the benefits for that year. So if you purchase during 2018 , your benefits would not kick in until 2019

While saving +-$500 per year depending on the tax rate is nice , it shouldn't be a critical factor in your decision to purchase 

It is alot more than $500.  Remember that not only do you get the exemption with homestead the homestead caps the taxing authority from raising you rates every year to market.  My house is currently being taxed at almost 100K less than market due to homestead.

 My response was for only losing the homestead exemption for the one year. I do realize that you valuation can only be raised 10% per year with the exemption which can usually be offset in year one by protesting the taxes and using your settlement statement 

512-293-3885

@Daniel A Lee Kim     The homestead exemption applies to the owner of the home on Jan 1 if it is your personal residence. The application period is Jan 1- Apr 30 and they do not accept early applications.

The Jan 1 date is important. If you close this year, you will get the exemption for 2019. But if you close after Jan 1, you'll have to wait until 2020 to get the exemption. It's too late to get an exemption for 2018.

There is an allowance for temporarily moving away (two years) as long as you don't establish a primary personal residence elsewhere. If you turn it into a rental, you will lose the exemption for the following year. 

The exemption does not cap the valuation of the property. The appraisal district will continue valuing the property for what it believes is the market value of the home. The exemption caps the assessed value at 10% increases year-to-year. That's the amount of the market value that they can tax you on. This is important in areas with rapidly increasing property values. If you lose the exemption, the full market value will kick in and you will be taxed on that until you reestablish your homestead exemption. So it's very important to do everything you can to hold on to your exemption.

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