Don’t pay more than your fair share
You may have noticed that your home’s value has skyrocketed over the past two years. Do you know who else noticed? Your local assessment district.
This is bad news for your property tax. A higher home value means a higher property tax. You can challenge the assessment of your property once a year. In the meantime, a good way to reduce property taxes is to review the exemptions available.
Texas, as a state, does not assess property taxes. Property taxes are local taxes. Exemptions are calculated by each tax unit. Local fiscal units include school districts, counties, cities, junior colleges, and special districts.
Exemptions are of two kinds: mandatory and discretionary. There is a mandatory exemption for residential properties of $3,000 for counties and $25,000 for school districts.
Your home may also qualify for a discretionary exemption. Tax units, with the approval of their constituents, are allowed to exempt up to an additional 20% of the value of a residential property. If they choose to do so, the additional exemption must be at least $5,000. The existence of these exemptions must be verified directly with each tax entity.
Now for the elderly and disabled – school districts are required to provide an additional $10,000 homestead exemption to property owners over the age of 65 or with disabilities. On a discretionary basis, government units may exempt additional amounts. As with the usual exemptions on family properties, the existence of these additional exemptions on family properties must be checked directly with each tax entity.
Elderly and disabled people can apply for a tax freeze. Unless a disabled person or a person over 65 makes bona fide improvements to their residence, a school district cannot impose taxes greater than the amount that was assessed when the person reached the age 65 or has become disabled. Other tax units may also offer a tax freeze, but this is not required.
Interestingly, tax freezes can be carried over to new home ownership. A qualified person who sells a residential property that is subject to a tax freeze can carry the freeze over to a new homestead on a prorated basis.
There are limits to increases in value. The assessed value of a residential property after its initial assessment cannot be increased by more than 10% in a subsequent tax year. However, the value of improvements made to the property may be added to the assessment. The limitation expires on January 1 of the tax year after the property ceases to be considered the owner’s residential property.
Don’t want to pay property taxes at all? If you are over 65 or disabled, consider tax deferral. You can defer paying your residential property taxes for up to 180 days after the property ceases to be your residential property. To do this, file an affidavit with the Chief Assessor stating the claim. The affidavit stops all collection processes. Your subsequent taxes bear interest at the rate of 5% per annum, but there are no penalties.
Property taxes stop at the grave. Cemetery plots, provided they are not held for profit, are tax exempt.
How to get a waiver? Interrogate. Your county’s assessment district usually has the forms online. Your assessment district may even helpfully display a full list of exemptions.
Another detail: Texas is a non-disclosure state, which means that you do not have to declare the amount you paid for your property.
Virginia Hammerle is an associate with the law firm Hammerle Finley. She is entering her 40th year in the practice of law and has handled numerous probate cases. She is certified in civil law by the Texas Board of Legal specialization. Contact [email protected] to receive his company’s newsletter. Visit www.hammerle.com for more information. This column does not constitute legal advice and is not a substitute for consultation with a licensed attorney.