Understanding Texas Homestead

by Loreena Yeo on August 31, 2011

What is a Homestead?

Understanding the Texas Homestead is something that all Texas homeowners need to do. In a layman’s term, there are 2 important but separate issues about understanding Homestead.

In troubled times, Texas Homestead is wonderful. It is used to protect homeowners against creditors during the homeowner’s financial crisis. During a foreclosure and bankruptcy, the homestead status is used to prevent a forced sale of the homeowner’s primary residence. The primary residence can be of any value, less than 10 acres in an urban setting and 100 acres for property in a rural setting.

For a typical homeowner, the Texas Homestead exemption is perhaps more meaningful on an everyday basis. Here in Texas, we deduct $15,000 off the property assessment value towards the school property taxes – which often the case is the largest portion of our property tax bill. More “discounts” are given to homeowners over 65 years old or disabled.

In a mathematical example in how your Property Tax is figured with the homestead exemption status:

Assume that your house is valued at $100,000. Your property tax bill comprises of school taxes, city and county taxes. Assume that the school tax is 1.5% of your house assessment value and the city and county taxes are 1%.

House value $100,000

School Taxes = $100,000 – $15,000 = $85,000. At 1.5%, that makes it = $1,275.

City/ County Taxes = $100,000 x 1% = $1,000.

Total Tax Bill = $2,275.

Assuming that your property is not your homestead,

House value $100,000

School Taxes = $100,000 x 1.5% = $1,500

City/ County Taxes = $100,000 x 1% = $1,000

Tax Bill = $2,500

Total Savings of 9%.

Note that all Texas homeowners receive the Homestead status upon declaring their primary residence as their homestead. However, you must fill out the Homestead Exemption status form in order to receive the “discounts”.

Also, beware that there are services out there that are charging homeowners $35 to file for the Homestead. That is a SCAM. There is no fee to filling out the form and mailing it back to your corresponding district county office. These letters will show up in your mailbox soon after you purchase your property. It will look official and carry an Austin address as if it is an official letter from the state.

Follow these links to the corresponding North Texas district appraisal office for your application:

Collin County Homestead Exemption Application

Denton County Homestead Exemption Application

Dallas County Homestead Exemption Application

Tarrant County Homestead Exemption Application

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