It's that time of year to remind everyone who bought a home in 2018 to make sure you send in the information to get your homestead exemption filed. Please DO NOT pay to have this done; it's free to file and can be done in just a few minutes. Check out the info below for details.
WHY IS FILING THE HOMESTEAD EXEMPTION IMPORTANT TO ME?
If you purchased a home that you occupy as your primary residence, you are entitled to the property tax exemption. I am sure you take as many IRS tax deductions as you are allowed; this is a similar concept. The exemption reduces a homeowner’s property tax bill by removing part of the home’s value from taxation.
For example, your home is appraised at $100,000, and you qualify for a $25,000 exemption (this is the amount mandated for school districts), you will pay school taxes on the home as if it was worth only $75,000. Taxing units have the option to offer a separate exemption of up to 20 percent of the total value.
Once you receive the exemption, you do not need to reapply unless the chief appraiser sends you a new application. In that case, you must file the new application. If you should move or your qualification ends, you must inform the appraisal district in writing before the next May 1st.
HOMESTEAD CAP- BONUS!!!
When the local Counties economy thrives, property values can increase by 20%, 25% and even 30% in a year. We have been experiencing this in the Austin area over the last several years. The Homestead Cap is an amazing feature in the fact that it restricts the amount that the assessed value of a residential property may increase from year-to-year! The appraised value can go up a maximum of 10% each year until it reaches the full market value.
Appraisal districts are required to appraise properties at their fair market value as of January 1 of each year. You qualify to have your appraised value capped if the property is your primary residence and you have had exemptions in place for two years. This means that the property will be appraised at full market value for the first year that you qualify and receive a homestead exemption.
When you qualify for a homestead cap, the second year you own the home, your market value and appraised value may not be the same. The market value may increase by any percentage over the previous year, but the “cap” makes sure that you are not taxed on an increase of more than 10%. Without the Homestead Cap it's no-holds-barred!
WHAT IF I HAVE OWNED MY HOME FOR YEARS AND NEVER FILED?
You may file an Application for Homestead Exemption with your appraisal district for the $25,000 homestead exemption up to two years after the taxes on the homestead are due. You should go ahead and file in order to possibly get a refund for the last two years and also to get the assessed value cap in place!
DO NOT WAIT TO FILE!
If you recently bought a home a just read that you have two years to file, DO NOT WAIT. I cannot tell you how many people have forgotten to file and have lost thousands of dollars! Carve out a few minutes to get this done online.
HOMESTEAD EXEMPTION REQUIREMENTS?
• You must own your home on January 1st of the year for which you are applying.
• You must reside at the home as your principal residence on January 1st of that year, and not claim any other property as homestead.
• Only individual homeowners (not corporations or other entities) may receive a homestead exemption.
• A homestead can be a house, condominium or a manufactured home. It can include up to 20 acres, if the land is also owned by the homeowner and used as a yard, or for another purpose related to the residential use of the home.
I have provided links to a few of the counties in the Austin area. CLICK HERE for the downloadable version of the Homestead Exemption Form for the State of Texas which can be mailed in to the County along with the required additional documentation (see appropriate county website for details as they will deny your application if not submitted correctly).
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