Property Tax Exemptions: A Breakdown
For the final piece in our property tax breakdown series, we will discuss exemptions. As the owner of a subject property in Texas there are opportunities to reduce its total assessed value. These opportunities come as deductions, or property tax exemptions, and are the most commonly used tool for property owners to reduce their property tax liability. There is the potential for exemptions to be either partial, removing a percentage/dollar amount from the total assessed value, or full, removing 100% of the property tax liability. As it currently stands, Texas mandates certain exemptions, while leaving others optional to the decision of an individual taxing entity.
The most recognizable is the residential homestead exemption. Any county that collects farm-to-market taxes, or flood control taxes, is mandated to provide a $3,000 residential homestead exemption (Tax Code Section 11.13a). Independent school districts (taxing entities) are mandated to provide a $40,000 residential homestead exemption. (Tax Code Section 11.13b). Additionally, any taxing entity has the option to adopt a local residential homestead exemption of up to 20%, but not less than $5,000 (Tax Code Section 11.13n). There is also a less common homestead exemption known as an inherited residence homestead exemption. To be considered an heir property owner, thus qualifying for this exemption, the primary residence must be inherited by a will, a transfer on death deed, or intestacy.
Another more recognizable option is the age 65/disabled person exemption. The state of Texas mandates independent school districts (taxing entities) provide anyone who is either age 65+, or disabled, with a $10,000 exemption (Tax Code 11.13c). Additionally, any taxing entity has the option to adopt a local exemption which cannot be less than $5,000 (Tax Code Section 11.13d). A person who is both disabled, and age 65+, can receive both exemptions in the same year, just not from the same taxing entity.
The last two exemption categories deal with veterans, and spouses. The disabled veteran or surviving spouse of a disabled veteran exemption mandates different deductions in different situations. A disabled veteran who owns a subject property receives a partial exemption, based on the individual disability rating (Tax Code Section 11.22). A surviving spouse receives a full property tax exemption, provided they have not re-married (Tax Code Section 11.133). Additionally, a disabled veteran who is awarded 100% disability compensation due to a service-related disability, with an individual disability rating of 100%, or an inability to be employed, will receive a full property tax exemption. Finally, the surviving spouse of first responder killed in the line of duty exemption mandates a full property tax exemption for the surviving spouse of certain first responders killed in the line of duty, provided they have not re-married (Tax Code Section 11.134).
All of these property tax exemptions require applications to verify certain requirements. As these exemption application processes can be potentially intricate, please don’t hesitate to involve us at Members Title if we can be helpful. Let us know how we can better serve your clients.