Monday, December 3, 2007
For IMMEDIATE Release

Homestead Exemptions Reduce Property Tax Bills

Homeowners can reduce their property tax bills in 2007 by taking advantage of homestead exemptions. Application forms are available at the San Jacinto County Appraisal District.

Chief Appraiser Clayton Adams informs homeowners that Texas law allows them to file a one-time application for homestead exemptions. These exemptions reduce the appraised value of the home. "You do not have to pay a fee to file for a homestead exemption," said Adams.

Property owners who have not received the general homestead exemption on their homes in which they were living on January 1, 2007, and those who became totally disabled or turn 65, must apply this year to receive their exemptions for 2007.

For the general homestead exemptions, homeowners must own and live in their homes on January 1, 2007. Homeowners 65 years of age and older and those who become disabled don’t need to own their homes on January 1 to qualify for the age 65 and older or disabled homestead exemptions. State law provides that they may apply as soon as they turn 65 or become disabled, own the home and live in the home as their principal residence.

State law also allows that if the age 65 and older spouse dies before applying for the age 65 and older exemption, the surviving spouse age 55 or older may apply for the age 65 and older exemption for the deceased spouse. The same filing deadlines apply.

If a homestead is located in a taxing unit that overlaps into two or more counties, the homeowner must apply at each county appraisal district.

A homeowner's principal residence and land are considered the homestead. It can include up to 20 acres of land and improvements. Improvements include the house, a swimming pool, greenhouse or any other structures, as long as the owner uses them for residential purposes.

Adams said that a property must meet four tests set by law to qualify for the residence homestead exemption. The person or persons claiming the exemption must own the property on January 1 (homeowners 65 and older or disabled need not own the property on January 1 for the age 65 and older or disabled homestead exemptions only); the property must be designed or adapted for human residence; the owner must use the property as a residence; and the property must be the principal residence of an owner who qualifies for the exemption.

A mobile home, even on leased land, can qualify for the exemption if it meets the four tests.

"A property owner can still qualify for the homestead exemption if part of the residence is rented out or used for other purposes, such as a home business," Adams said. "The home will not lose its exemption if the owner moves away temporarily for a period of less than two years, so long as he or she intends to return and doesn't claim another homestead exemption elsewhere." A property owner may continue to maintain the residence homestead exemption if the owner is absent from the property for more than two years due to military service outside of the country or residency in a facility proving health, infirmity , or aging service.

Texas law provides several types of exemptions for homeowners. For school tax purposes, all homeowners may receive a $15,000 general homestead exemption and homeowners 65 and older or disabled receive an additional $10,000 exemption.

The school tax exemption for those homeowners 65 and older or disabled provides a special property tax "ceiling" for school taxes. While the market value of an elderly or disabled person's home may fluctuate with the market, the school taxes cannot increase above the tax amount in the first year that person qualified for that homestead for the age 65 and older or disabled exemption.

The tax ceiling can increase, however, if the owner adds an improvement, other than normal maintenance or repair. When the owner adds a new improvement, such as a room or garage, the new improvement is taxed at its current market value and the current tax rates. The new taxes are added to the previous tax ceiling to create a new ceiling.

Homeowners 65 and older or disabled may transfer the same percentage of tax savings to a new home. The homeowner transfers the percentage of school tax paid on the former home, based on the last year the homeowner qualified that home for the tax ceiling, to the new home. The new tax ceiling is calculated to give the homeowner the same percentage of tax paid as on the former home. The homeowner may not claim two different homes in the same year.

For example, if the homeowner had a school tax ceiling of $100, but would pay $400 in 2007 school taxes without the tax ceiling, the percentage of tax paid is 25 percent. If the 2007 school taxes on the new home are $1,000, the new tax ceiling would be $250, or 25 percent of $1,000. The homeowner may request a certificate from the appraisal district where the former home was located that gives information about the tax ceiling. The homeowner gives this information to the appraisal district where the new home is located.

If the elderly homeowner dies, the surviving spouse may apply to keep the school tax ceiling if the surviving spouse was at least 55 years of age when the qualified spouse died. The surviving spouse also may transfer the tax savings with the school tax ceiling to another homestead, as discussed above.

The county, city or junior college district may decide to set a tax ceiling provision for homeowners 65 and older or disabled. Each taxing unit’s governing body may decide to grant the tax ceiling provision or the local citizens in a taxing unit may petition for an election to vote on granting the tax ceiling provision in that taxing unit.

Homeowners should notify the chief appraiser when they no longer qualify for the general, age 65 and older or disabled homestead exemptions. A 50-percent penalty is added to delinquent home taxes if homeowners fail to notify the appraisal district and receive homestead exemptions to which they are not entitled.

Different types of taxing units—counties, cities and special districts—may offer different homestead exemptions. Counties must offer a $3,000 general homestead exemption on the portion of the county tax levied for farm-to-market roads or flood control.

Any taxing unit's governing body may grant an additional optional exemption on the homesteads of disabled or elderly residents, or both. This optional exemption may be no less than $3,000 from the home’s appraised value and has no limit on the maximum amount.

Taxing units may also offer a local option exemption based on a percentage of a home's appraised value. In 2007, any taxing unit can exempt up to 20 percent of the value of each qualified homestead. No matter what percentage of value the taxing unit adopts, the dollar amount of exemption for any home must equal at least $5,000.

For more information, homeowners may contact the San Jacinto County Appraisal District at 99 Slade St in Coldspring, 936-653-1450.