Recently, there was a news release from HCAD(Harris county Appraisal District) about the Texas Legislature changes made in the last session. It is about Homestead Exemptions which helps to reduce some taxes on your property. It is the talk of the town around many social media outlets and many homeowners new and old were asking about it. So I thought it would be beneficial to do a post clarifying few points. Before I go explanining about the changes, let me dive quickly into basics of Homestead exemptions for new homeowners and move to talking about the fixes put in place on the loophole existed for sometime now.
What is a Homestead Exemption?
Homestead exemption is a way to save taxes on your property which you call it as a primary residence. It is one way to encourage home ownership by reducing the burden on property taxes in Texas and some other states. As per texas state website, Homestead exemptions remove part of your home’s value from taxation, so they lower your taxes. For example, your home is appraised at $100,000, and you qualify for a $15,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it was worth only $85,000. Taxing units have the option to offer a separate exemption of up to 20 percent of the total value. Each taxing unit like School District, MUD, Harris county have their own exemption rates.
How can I apply?
One needs to apply once at the beginning of the tax year and every year it carries over. You need to apply before April of that year for that tax year. For example, you need to apply by end of April 2012 for 2012 tax calculations to get the taxes sent by end of 2012. Here is the forms to send your homestead exemption for HCAD.
What is the new change all about?
The change is to close certain loopholes in the system which currently allows anybody to avail for the exemption if they own a home and don’t call it has a primary residence. Thats gives advantage to landlords who owns multiple properties and take advantage of this exemption for all of their homes. Also many landlords who are out of state where also making use of this exemption because there is no verification mechanism in place to make sure that they are really living in that property. Now the changes makes it compulsory for any new application to be filed after Sept 1, 2011 should accompany copies of Texas driver license and Car Registration. Also the address in the application should match the address in the copies otherwise they won’t be qualified for homestead. This new check put in place will avoid anyone who likes to take advantage of homestead exemption. Other restrictions continue to hold for different classes of exemptions provided by state. Please check out the details at hcad.org
I am old homeowner as of 2010, do I have to send a new application?
There was a confusion among old homeowners whether they need to reapply with neccessary documents. Not needed. I clarified with HCAD and as per HCAD, old homeowners don’t have do anything. It is only for new applications filed after Sept 1, 2011.
I am a new homeowner or will be new homeowner soon. What do I need to do?
Just follow the instructions posted at hcad.org and apply for the exemption.
Hope this helps to clarify some points on the new changes on Homestead exemption. Let me know whether you have any more concerns and I will try to clarify with the knowledge or will get clarification from HCAD.