Most Texas homeowners are aware of the homestead law that exempts them from certain taxes, but did you know the law also provides two other key provisions? One is protections from creditors and the other is the right of occupancy. But let’s start at the beginning.
The “homestead” has been a part of Texas law since colonial times. It’s primary purpose was to encourage settlement. While most Texans have at least some knowledge of the concept of the homestead, the term has three different contexts.
The most common is the Homestead Tax Exemption which applies to ad velorem (based on the value) taxes. The principal residence must be occupied directly by the owner or a surviving spouse. In the vast majority of Texas school districts, residence homesteads are allowed an exemption of $25,000 of the homes’s value for school taxes. Homeowners who are 65 or older or disabled qualify for an additional $10,000 exemption. However those 65 and older AND disabled cannot receive double the exemption amount.
The second meaning is protection from creditors. The homestead of a family or single adult is protected from forced sale for the purpose of paying debts, such as bankruptcy filings. The exception is delinquency in taxes, mechanics liens, home equity, refinance transactions and reverse mortgages. In other words… if a bank or lending institution carries the note on your home and you don’t pay your mortgage… the home can be a forced sale. We call it, “You don’t pay…. You don’t stay.”
The third reason for filing is the right of occupancy. That right extends to all family members who continue to occupy the homestead after the owner’s death. That protection applies to:
. A spouse
. Minor children (and in some cases their guardians) and
. Unmarried children.
Children cannot claim their homestead rights until the death of the surviving spouse, however.
A property remains a homestead until death, abandonment or sale and can only be used on ONE property. If you own multiple properties, you much choose.
How do you take advantage of a homestead? Simply file an application with your appraisal district. It’s that simple. There are many groups that will offer to file the exemption for you for a fee. The county does NOT charge a fee for filing, so don’t fall for that scam. Is it worth your time to file? Absolutely… if savings and peace of mind appeal to you. Check our your county appraisal district website for more information.
Author’s note: These are the highlights of the law, but there are other fine details that can apply. Nothing in this blog should be considered legal advice. For specific advice consult an attorney. And as always we hope you’ll choose Eagle Mountain Realty for all your real estate needs.