In Texas, there are a few property tax exemptions you can file for to limit how much your Texas property taxes can increase per year. This article will focus on one exemption, the Homestead exemption, which provides a residential property own a capped value on property tax increases year over year.
Applying for a Homestead exemption caps the maximum increase on taxes a residential property owner can receive since the latest reappraisal to 10%. Some people believe this to mean that market values for a residential homestead in Texas cannot be increased more than 10% in any one year. This notion is false, as the capped value is based on the date from the latest reappraisal and applies to your assessed (or taxable value), not the market value. The market value can be whatever the market currently supports.
You can understand more about the differences between market and appraised values here.
The 10% limitation is an annual limit to the assessed (or taxable) value and it dates from the latest reappraisal. If that reappraisal occurred two years ago, your new assessed value can exceed last year’s by 20%. The limitation applies only to a residential homestead; you must have filed for the homestead exemption. Your assessed (or taxable) value can be less than your market value (it will never be more) and in that case you’ll pay taxes on the lower value (until it increases 10% per year up to but not in excess of the market value.) You should still protest your market value, even if your appraised value is capped under the Homestead Exemption.
The appraised value of a residence homestead for a tax year may not exceed the lesser of: the market value of the property; or the sum of:
What this means is that a property’s assessment can be increased more than 10% from its previous assessment if the previous reappraisal is more than one year old. For example, if the latest reappraisal was two years ago then the new assessment’s limitation on increases is 20%. All this assumes two things:
In Texas, it is extremely important to do everything in your power to limit your property taxes. Property Taxes in counties across Texas are one of the largest tax categories given there is no state income tax. You need to limit your maximum property tax increase in any given year by capping you maximum liability.
In order to apply for a Homestead Exemption, you need to make sure you occupied the home as your primary residence as of January 1 of the current year and have submitted the required documentation with you county.
You can find your county specific requirements and forms below.
Property Tax Protest is your one stop shop for all the legal advice and direction you need to cap your Texas property taxes and also protest your market value to ensure you are paying your fair share of Texas Taxes.
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