Hot DFW housing market could lead to higher taxes for homeowners
By Matt Quinn, CFA® March 2018
How to get the most out of Texas homeowner exemptions
According to Realtor.com’s 2018 National Housing Forecast, Dallas-Fort Worth was recently ranked as the number two housing market in the country. Given that prices for sales of existing homes are rising faster than the national average, we would expect appraised values for properties in the region to reflect this growth when notices are provided by county tax appraisal districts in mid-April. In advance of receiving these notices, we think now is a great time for Texas homeowners to review and update their current exemptions for property taxes.
Most homeowners in the State of Texas know they can file for a homestead exemption on their primary residence. We will get into more detail on that below for those who may not be familiar with this exemption. However, did you know that you can also use the same form and process to file for several other types of exemptions? This includes a disabled person, disabled veteran, and an exemption for homeowners that are over the age of 65. Surviving spouses may also qualify for several types of exemptions worth checking into. In addition to a set exemption amount, several taxing entities in the State of Texas also freeze tax rates for individuals that quality for these other types of exemptions.
The State of Texas defines a homestead as a structure, condominium, or manufactured home located on owned or leased land that serves as an individual’s primary residence. A homestead exemption prevents the appraised home value from increasing by more than 10% from year to year, assuming no improvements have been made to the property. A homestead exemption also allows the owner to remove part of a home’s appraised value from taxation, depending on the exemptions offered by the taxing entity. Keep in mind most homeowners are responsible for paying taxes to multiple entities. This typically includes the county, local city or municipality, independent school district, and in some cases the local community college. Most independent school districts allow for a $25,000 reduction in the appraised value before determining taxes due each year. Other taxing entities also offer a set percentage deduction from their rates.
What should you do?
For new homeowners in 2017, the deadline for filing a homeowner’s exemption form is April 30, 2018. You can find a generic form available from the Texas Comptroller of Public Accounts. You can also find county-specific forms available on most county appraisal district websites. Keep in mind the State of Texas now requires all forms to be submitted with a copy of the homeowner’s driver’s license or state ID. This must have the address updated for the home you are applying the exemption for, so you need to go ahead and have your personal information on these identification cards updated too.
For existing homeowners, we think it’s good to go ahead and check on the current exemption status of your property and make sure you are taking full advantage of the types of exemptions offered. The best place to look for this is on you tax bill. You can also find useful information about your property by doing an address search on most county appraisal district websites. While the State Legislature has blocked the display of certain exemption information from public records, you can still look to see if your property is listed with a homestead or ‘other’ type of exemption. You should also review your tax bill records to see if the exemption status was in place for prior years. If the information isn’t right, it’s not too late! You can still file for the exemption for up to two years after the February 1st delinquency date.