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Do You Have to Live in a House You Own to Claim the Homestead Exemption in Texas?

by Fraser Sherman

The homestead exemption in Texas offers two benefits. One advantage is that once you've secured the exemption, you pay less in property taxes every year. The other benefit kicks in if you file Chapter 7 bankruptcy. In Chapter 7, the bankruptcy court can sell your property to pay off your creditors. The bankruptcy homestead exemption keeps the court from selling your house.

Property Taxes

To get a property-tax exemption for the current year, you must have been living in the house on January 1. Usually you also have to own the house on January 1. Seniors and disabled Texans can buy the house after January 1, though, and still get an exemption on this year's taxes. The tax breaks include a $15,000 reduction in taxable value when figuring school-related property taxes. There are several other possible tax breaks, and counties can offer local-option homestead exemptions as well.

Requirements

To get an exemption you file Form 50-114 with your county tax assessor's office. If you're not disabled or a senior, you have until April 30 of the current year to apply for a current-year homestead exemption. You need to attach a copy of your driver's license or other state ID, and a copy of your vehicle registration, both showing the correct address. If you don't have a car, attach an affidavit saying so, along with a utility bill for the current address.

Bankruptcy

Some states protect homes in bankruptcy only up to a certain dollar amount -- not so in Texas, where your homestead is safe no matter what it's worth. Size is a factor, though: you can't exempt more than a 10 acre spread inside a city, 100 acres in rural areas or 200 acres if it's a rural homestead and your family lives there. Form 50-114 gives you your bankruptcy exemption too, but you have to file the form before you file for bankruptcy.

Special Cases

If you move out temporarily, for example because you have to be hospitalized, you don't lose your exemption as long as you're planning to return. Renting out part of the house or using part of it for business doesn't affect your exemption either. You can even rent out the whole house temporarily, provided you haven't claimed another house as your homestead. Filing for a homestead exemption is free, though scam artists often try to trick homeowners into paying a fee for it.

About the Author

Author of two film reference books, "Cyborgs, Santa Claus and Satan" and "The Wizard of Oz Catalog." Published in Air & Space, Backpacker, Newsweek, The Writer, and multiple trade journals (can fax samples if requested, don't have them available digitally)

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