Homestead Exemption Texas

Homestead Exemption Texas

Homestead Exemption Texas - A Texas homestead can be a separate structure, condominium or a manufactured home located on owned or leased land, as long as the individual living in the home owns it. A homestead can include up to 20 acres, if the land is owned by the homeowner and used as a yard or for another purpose related to the residential use of the homestead.

The Texas homestead exemption began as protection for the wives and children of the early settlers in the event the man of the house was lured into a not-so-honest game of chance or decided he needed a few dollars more to continue a night out on the town. More seriously though, the wives and children of a deceased breadwinner were secure in their home(stead) and could not be removed because of some improper or manufactured claim of debt.

Homestead Exemption Texas - Protections

The practical protections of the homestead laws prevent any creditor, except for the mortgage holder, a taxing authority, or the holder of a note created for a home improvement loan from forcing the sale of the homestead to satisfy nonpayment of a debt. It is difficult to "abandon" the homestead protection to borrow against its equity. An owner who wants to maintain property ownership and be able to borrow against its equity would have to move out of the property and demonstrate it is now being used as income- producing real estate and that he or she has established a new homestead elsewhere.

Home equity loans in Texas involve numerous restrictions and requirements that may not exist for such loans made in other states. The amount of a home equity loan plus the balance of the first mortgage may not exceed 80% of the value of the property, thus leaving a 20% equity cushion at the time of the second lien.

Types of Homestead Exemptions Texas

  • School taxes: All residence homestead owners may receive a $15,000 homestead exemption from their home's value for school taxes.

  • County taxes: If a county collects a special tax for farm-to-market roads or flood control, a residence homestead owner may receive a $3,000 exemption for this tax. If the county grants an optional exemption for homeowners age 65 or older or disabled, the owners will receive only the local-option exemption.

  • Age 65 or older and disabled exemptions: Individuals 65 and older and/or disabled residence homestead owners may qualify for a $10,000 homestead exemption for school taxes, in addition to the $15,000 exemption for all homeowners. If the owner qualifies for both the $10,000 exemption for 65 and older homeowners and the $10,000 exemption for disabled homeowners, the owner must choose one or the other for school taxes. The owner cannot receive both exemptions.

  • Optional percentage exemptions: Any taxing unit-including a city, county, school, or special district-may offer an exemption of up to 20 percent of a home's value. But, no matter what the percentage is, the amount of an optional exemption cannot be less than $5,000. Each taxing unit decides if it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which an owner qualifies. The taxing unit must decide before July 1 of the tax year to offer this exemption.

  • Optional 65 or older or disabled exemptions: Any taxing unit may offer an additional exemption amount of at least $3,000 for taxpayers age 65 or older and/or disabled.

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