Have You Filed Your Homestead Exemption Yet?

Updated May 12, 2023.

If you currently own a home or are planning to buy one, it’s important that you understand the benefits of filing for your homestead exemption. Under Texas law, homeowners who file for homestead exemption are offered protections as well as tax benefits on their primary residences. So what exactly defines a homestead? A homestead can be a separate structure, condominium, or a mobile home located on leased land, as long as you own it. It can include up to 20 acres if the land is used as your yard. What this is going to do is basically three things:

Protection for your Home

First, it’s going to provide protection from any creditor from forcing the sale of your homestead to satisfy non-payment of a debt. Now there are certain exceptions to this such as your mortgage holder, a taxing authority, or the holder of a note created for a home improvement loan.

Saving Money on Property Taxes

Secondly, your homestead exemption provides for a reduction in the valuation of your home for taxing purposes; thereby reducing your total property tax liability. These valuation deductions can show up on any number of the individual taxing entities to which your property belongs, but the biggest benefit will show up on your school district taxes. As an example, for a typical home in Katy ISD, your school tax savings might look like this:

Keep in mind, this simple example represents only the school district portion of your tax bill and more than likely there will be other entities that impose a tax rate on your home. You SHOULD however investigate whether additional exemptions are available from the other taxing entities on your property. The City of Katy, for example, allows for a 20% exemption of the total home value if the home falls under its taxing jurisdiction. There are also additional exemptions that some homeowners may qualify for as well – Over 65, Agricultural, etc.

Annual Valuation Cap

Last, your homestead exemption caps the annual increase on taxable value that an appraisal district can make on your home at 10% per year. So in short, the taxable value of your home can be no more than the preceding year’s appraised value + 10% even if the market value goes up. It’s important to recognize the difference between market value and taxable value. Even though your taxable value is capped at 10% each year, the increase is based on the market value for the previous year, NOT the previous year’s taxable value. This is why it’s important to fight your assessment each year.

So what else do I need to know?

Here’s the great thing: you only have to file for your homestead exemption one time and it’ll carry over year after year. But filing is NOT automatic. To qualify, homeowners must live in the home on January 1st, and make application with the County Tax Assessors office. Each county may have their own application, so be sure to use the correct form for your home. We’ve linked to the applications from the 6 Houston-area appraisal districts below.

Now one more thing: if you get letters in the mail telling you that they’ll file your homestead exemption for a fee, trash it. Filing your homestead application is free. And those letters, despite looking a lot like official documents, are from companies trying to make a buck off the backs of unsuspecting new homeowners. Typically, these letters will show up in your mailbox soon after you purchase your property.

Is property tax relief on the way?

The short answer is Yes. The long answer is that we don’t yet know what that is going to look like. Governor Greg Abbott has made property tax relief a primary focus of his agenda, and both the Texas House and the Texas Senate generally support that mandate… but have their own ideas about what it should look like. Both chambers have passed competing measures aimed at providing tax relief to Texans and each would have to pass through the other’s chamber to be sent to Voters in November for approval. Each would be a win. Here’s what they look like: