Now that tax time is over for 2020, we want to prepare you for next year by telling you everything you need to know about homestead exemptions. Read on to learn how your home can be one of your best assets when it comes to minimizing your tax liability.
1. What is a Homestead Exemption?
The term homestead exemption refers to exemptions from property taxes that property owners can claim. It also pertains to homestead protection that protects your primary residence in the case of financial hardship, such as the death of a provider. Homestead exemptions apply to all types of residential properties including single family homes, townhomes, condos, and many others. Each state, city, and county have their own rules and regulations for homestead exemptions.
2. Homestead Exemptions by State
Each state has its own standards when it comes to exceptions. A few interesting ones include:
- New Jersey has no homestead exemption.
- Massachusetts has a homestead exemption of $500,000.
- Florida has no maximum amount for exemptions. In fact, exemption is allowed for properties up to half an acre in city limits and 160 acres everywhere else. This is why you often hear about tax cheats and such moving to Florida.
- Here in Texas, only your principle residence qualifies for an exemption. The owner must be an individual or a married couple, not a business. Those 65 and older or who qualify as disabled are allowed special homestead exemptions.
3. Homestead Exemptions in Harris County
Most of our clients reside in Harris County, which covers Houston, Jersey Village, and many others. Here we have several types of exemptions:
School taxes – All home owners who qualify for a homestead exemption receive at least a $25,000 homestead exemption on their home’s value for their school district taxes.
County taxes – All home owners who qualify for a homestead exemption receive a 20% optional homestead exemption. For example, homes valued at $100,000 can have their taxable value reduced by $20,000 to $80,000 for Harris County.
Other optional exemptions – All home owners can receive an exemption for up to 20% of the home’s value from any taxing body such as a city, county, school district, or other special district. This amount cannot be less than $5,000 no matter the percentage. For example, if your home is valued at $200,000 and you are offered a 20% optional exemption, this will total $50,000. Even if 20% of your home is valued at less than $5,000, you will still receive this amount in optional exemptions. Each taxing body will determine whether or not it will offer an optional exemption and to what percentage.
You may visit the Harris County Appraisal District for more on these regulations, along with any changes.
Texas and Houston Homestead Exemptions
One of the best reasons to have a bookkeeper on hand is to ask all questions on homestead exemptions and get them answered. Feel free to contact us if you need help doing so.
