Texas Property Tax Exemptions – Everything You Need to Know

October 7, 2021

Overview: Texas Property Tax

Texas doesn’t have a state property tax. Property taxes are locally assessed and administered. States charge property taxes to pay for roads, schools, emergency response services, and other public services. In fact, Texas property taxes contribute most of the tax funding available to the local government ($67 billion+). However, Texas property taxes can become a burden to property owners.

Consequences of Overdue Property Taxes in Texas

Property owners in Texas face serious consequences if they don’t pay due property taxes. The most notable consequences include;

Accumulation of late fees and penalties: The late fees and penalties charged on overdue property taxes accumulate very fast. Counties can charge a base late fee of 6% a few months after property taxes are due. A 1% monthly interest is also charged, increasing by 1% monthly if taxes remain unpaid.

The base late fee can also double to 12% if the taxes remain unpaid for a year. When you consider the fact that counties can charge attorney fees (up to 20% of your tax bill), it’s easy to see how overdue property taxes become unmanageable.

Foreclosure: You can lose your property in the worst-case scenario because of accrued Texas property tax. If a tax lien is placed on your property, the local taxing authority (county) can foreclose on your property when overdue tax and accumulated late fees and penalties remain unpaid for extended time periods.

This explains why Texas property owners turn to property tax loans. A Texas property loan can help property owners with overdue taxes offset their tax liabilities and get more favorable repayment terms. Understanding Texas property tax exemptions can also help to offset some or all overdue property taxes.

Types of Texas Property Tax Exemptions

Property tax exemptions can be broadly categorized as total or partial. Partial exemptions reduce overdue taxes by a certain percentage or fixed amount of the property’s value. Total exemptions remove all overdue taxes. Taxing units in Texas have the mandate to offer some mandatory exemptions. They also decide on who to offer such exemptions locally.

it’s important to discuss exemption provisions in regards to different properties, individuals, organizations, etc. to understand the different types of property tax exemptions in Texas.

a. Tax exemptions for residence homestead

As per Texas Property Tax Code 11.13b, school districts can offer a $25,000 tax exemption on residence homesteads. Tax Code 11.13n allows tax units to offer separate residence homestead tax exemptions up to 20% of the property value (appraised value). Tax Code 11.13a allows counties that collect flood control or farm-to-market taxes to offer $3,000 in residence homestead exemption.

To qualify, someone simply needs to have an ownership interest and use the property as their principal residence. What’s more, you shouldn’t claim exemption on any other residence homestead in Texas or other states in the US.

b. Tax exemptions for disabled persons and individuals aged 65 years and above

Disabled persons, as well as elderly persons (aged 65 and above), can enjoy additional $10,000 residence homestead tax exemptions from school districts as per Texas Tax Code 11.13c. Section 11.13d allows taxing units to offer separate residence homestead tax exemption of $3,000 or more.

Elderly individuals aged 65 or more must be living in their property to qualify for local option exemption. Surviving spouses can enjoy exemption if the older homeowner dies. However, they must be aged 55 or more at the time of their spouse’s death. They also need to live in the property in question and apply for an exemption.

c. Tax exemptions for veterans

Texas Tax Code 11.22 offers partial exemptions to disabled veterans and their surviving children and spouses. Tax Code 11.132 gives residence homesteads partial exemption applicable to residence homesteads given to disabled veterans via charity. Exemptions are also extended to surviving spouses provided they don’t remarry. Tax exemption amount is determined by the service-connected disability percentage.

d. Tax exemptions for manufactured & cooperative housing

Texas property tax exemptions may be extended to manufactured homes as per Texas Tax Code 11.432a. For such homes to get homestead exemptions, owners must adhere to detailed provisions on statement of ownership. Cooperative housing can also enjoy homestead exemptions as per Texas Tax Code 11.13o.

e. Tax exemptions for unstable or uninhabitable residence

As per Texas Tax Code 11.135a, owners of uninhabitable residences can receive exemption from such structures, land, and improvements while they construct a replacement structure on the land. For this tax exemption to be applicable, the owner has to actively be constructing a replacement residential structure or preparing the site. This exemption is extended for a maximum of two years.

Tax exemptions apply in many other scenarios. For instance, Heirs to a property and surviving spouses of first responders can apply for exemption. Exemptions can also be extended to property owned by community land trusts and religious organizations. Texas property tax exemptions are a vast subject that should be explored with the help of experts.

Applying for Property Tax Exemption in Texas

Property owners seeking property tax exemptions in Texas can apply with appraisal districts. Filling should be done before 1st May. Appraisal district chief appraisers decide if exemptions are given or denied.

Some exemptions may demand filing once, while others may require annual filing. Majority of one-time exemptions allow chief appraisers to ask for new applications verifying eligibility for exemption.

While chief appraisers decide whether applications for tax exemptions are approved or denied, property owners can appeal unfavorable decisions. Consequently, taxing units can challenge tax exemptions given to property owners.

Generally, property is taxable in Texas unless the owner or persons with interest to the property i.e., heirs can meet every legal requirement for an exemption. Property tax exemption forms ask all/most of the information required to grant to deny an exemption. In most cases, exemption is granted or denied based on the property’s use, a property’s qualifications for tax exemption, and the owner’s eligibility.

FAQs About Texas Property Tax Exemptions

A chief appraiser has denied my application for property tax exemption in Texas. What can I do?

Chief appraisers can deny tax exemptions because a property owner doesn’t show entitlement to exemption or their property doesn’t qualify for exemption. Other reasons include lack of proper documentation, errors in documentation i.e., documentation doesn’t match with the original property address. As mentioned above, you can appeal a chief appraiser’s decision to deny you exemption. However, if your appeal doesn’t materialize, you’ll have to pay your overdue property taxes.

I can’t get a property tax exemption, what do I do?

If you are denied Texas property tax exemptions and appeal the decision and still fail to secure exemption, you’ll have to pay property tax or face the consequences mentioned above, like hefty penalties and possible foreclosure.

You can avoid these negative outcomes by getting a property tax loan to offset your overdue taxes. Luckily, there are many great property tax loan providers in Texas, such as Texas Property Tax Loans Pros, ready to assist. Get a quick, reasonably priced property tax loan NOW and save your property regardless of your credit score.