Click here for a printable version of our Homestead Exemption flyer.
If you closed a real estate transaction with FireBoss Realty in 2020, you may remember that we promised to remind you about your homestead exemption in January. We also advised you that Texas is a non-disclosure state and that the price that you paid for your home was not a matter of public record. The tax offices watch deed filings and update their tax records and the central appraisal district for your county will also send you a letter asking for you to tell them how much you paid for the home. Being in a non-disclosure state means that it isn’t required for you to divulge that information. The central appraisal district uses that information to adjust the market value of your home. Market Value, Appraised Value, and Assessed Value are all different and knowing that differences can make a considerable impact on the property taxes you will owe at the end of the year.
Market Value is defined by the Texas tax code as “The price at which a property would transfer for cash or its equivalent under prevailing market conditions if: (A) exposed for sale in the open market with a reasonable time for the seller to find a purchaser; (B) both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and (C) both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other.” Basically, that means the price a willing buyer and willing seller agree to in an open market without any outside influence on the transaction.
Appraised Value is the value placed on the property by the county central appraisal district for the purposes of determining a single value used to calculate taxes by the various taxing authorities. The tax code charges the appraisal district with determining the appraised value of every property as of January 1st of each year. That is why they send you a letter asking how much you paid for the property. With so many properties to determine the value on, if you tell them how much you paid when you purchased it in an open market, that helps them set the value at a true market value. However, since everyone wants to pay as little tax as possible, letting the appraisal district determine their own value and waiting to see what that value is… is often advantageous to the purchaser of the home. If the appraisal districts value is lower than the sales price, it saves you money. If the appraisal districts value of the home is higher than the sales price, providing the closing documentation from the purchase transaction is sufficient to lower the appraised value to the amount of the actual sale of the property.
Assessed Value (sometimes referred to as taxable value) is the value of the property used to determine the property taxes paid to the various taxing authorities. That value is impacted by the various exemptions that can be claimed for that property. The most common exemption is the Homestead Exemption. However, there are also exemptions for agricultural property, being over 65 years of age, being disabled, and other less commonly used exemptions. The assessed value is determined by reducing the appraised value by the amount allowed by the specific exemption a homeowner qualifies for. Several forms of tax relief are available which may reduce the taxable value of your property. Applying for exemptions is the taxpayer’s responsibility. Some exemptions require a new application each year.
The Homestead Exemption allows the owner of a property used as their primary residence to decrease part of the value of the home from appraised value. In order to qualify, you must own your home on January 1st of the tax year. The first year you own the home the appraisal district will adjust your assessed value to equal their opinion of the market value. After the first year that the property qualifies for the homestead exemption, the homestead exemption will limit the assessed value increase in subsequent years to 10% (plus the value of any permitted improvements to the property… pools, patio covers, room additions). This limited assessed value will be reported on the annual appraisal district valuation notice as the “capped value”. It is common for the value of a property on the tax rolls to be considerably lower than the actual market value of that same property because of the compounding effect the homestead exemption has on the “capped value” over several years or decades. Once a homestead exemption is filed for a property, it stays on the property until the property deed changes hands or the homeowner files for a homestead exemption on a different property.
In Texas, all residential homesteads are allowed a $25,000 exemption. Ages 65+ and disabled homeowners may qualify for an additional $10,000 school district tax exemption. Disabled veterans and certain dependents may qualify for an additional exemption of up to $12,000. All of these exemptions may be filed for on the same Residential Homestead Exemption Application available online from your county appraisal district website.
Collin County Appraisal District – 469-742-9200 – www.collincad.org
Dallas County Appraisal District – 214-631-0520 – www.dallascad.org
Denton County Appraisal District – 940-349-3800 – www.dentoncad.com
Ellis County Appraisal District – 972-937-3552 – www.elliscad.org
Grayson County Appraisal District – 903-893-9673 – www.graysonappraisal.org
Hunt County Appraisal District – 903-454-3510 – www.hunt-cad.org
Johnson County Appraisal District – 817-648-3000 – www.johnsoncad.com
Kaufman County Appraisal District – 972-932-6081 – www.kaufman-cad.org
Parker County Appraisal District – 817-596-0077 – www.parkercad.org
Rockwall County Appraisal District – 972-771-2034 – www.rockwallcad.com
Tarrant County Appraisal District – 817-284-0024 – www.tad.org
In order to qualify for a residential homestead exemption, the applicant must provide a copy of their Texas driver’s license or Texas identification certificate to the Central Appraisal District when submitting the application:
IMPORTANT NOTE: The property address on the exemption application must match the address listed on the applicant’s Texas driver’s /Texas identification certificate; otherwise, the Chief Appraiser is prohibited from approving the exemption.
TO RECEIVE YOUR EXEMPTION(S), YOU MUST OWN THE PROPERTY AND BE LIVING IN THE PROPERTY AS OF JANUARY 1ST. YOUR APPLICATION MUST BE APPLIED FOR ON OR BEFORE APRIL 30TH TO RECEIVE THE TAX BENEFITS FOR THIS YEAR, THIS IS A FREE SERVICE.
Remember, tax statements are generally mailed in October of each year. The taxes are payable on or after October 31st, however, you may elect to pay them as late as January 31st without penalty. Taxes become delinquent February 1st and on this date penalties and interest do accrue.
If you receive a Tax Statement and your mortgage company is escrowing funds for taxes from your monthly payments, forward the statement to your mortgage company so that they can pay the taxes.
ONE ADDITIONAL NOTE: There are a lot of scammers that keep tabs on who buys real estate, when they buy it, and who their mortgage company is. After you close on a new home, if… correction… when you receive mail wanting you to pay for anything associated with closing your home it is most likely junk mail that you don’t need. The title company has already paid any fees associated with the closing, the deed, and the home warranty. The mortgage company has all of the information that they need and have already been paid any fees that they were due. If you have questions about something that you receive in the mail, always ask your mortgage company or title company if it’s legitimate or if it’s junk mail.
You can also call me and I’ll be happy to answer any questions that you have.
Scott Johnson – Team Leader
FireBoss Realty makes no warranty, express or implied, respecting the information presented and assumes no responsibility for errors or omissions. FireBoss Realty is a real estate team operated by Texas Realtors Scott & Amie Johnson under the brokerage of Keller Williams – Central/75. Each Keller Williams office is independently owned and operated.