Property Tax Exemptions Overview

Property Tax Exemptions

There is no state property tax in Texas. Property tax in Texas is locally assessed and locally administered. All real and tangible personal property in Texas is taxable in proportion to its appraised value unless the Texas Constitution authorizes an exemption. Texas law provides a variety of property tax exemptions for qualifying property owners.

Local taxing units offer partial and total exemptions from a qualifying property's appraised value. A partial exemption removes a percentage or a fixed dollar amount of a property’s value from taxation. A total exemption excludes the property's entire value from taxation. The state mandates that taxing units provide certain mandatory exemptions and allows them to decide locally on offering others (local option).

A property owner must apply for an exemption in most circumstances. Applications for property tax exemptions are filed with the appraisal district in the county in which the property is located. Applications for the exemptions mentioned below can be found at www.bcad.org under "Forms", and are attached to this article. The general deadline for filing an exemption application is before May 1. Appraisal district chief appraisers are solely responsible for determining whether a property qualifies for an exemption.

Residence Homestead

A general residence homestead exempts a portion of your residence homestead's value from taxation, potentially lowering your taxes. Tax Code Section 11.13(b) requires school districts to provide a $140,000 exemption on a residence homestead and Tax Code Section 11.13(n) allows any taxing unit to adopt a local option residence homestead exemption of up to 20 percent of a property's appraised value. The local option exemption cannot be less than $5,000. Tax Code Section 11.13(a) requires counties that collect farm-to-market or flood control taxes to provide a $3,000 residence homestead exemption.

For example, if your home is appraised at $300,000 and you qualify for a $140,000 exemption (amount mandated for school districts), you will pay school taxes on the home as if it was worth only $160,000. Taxing units have the option to offer an additional exemption of up to 20 percent of the total value.

In order for a property owner to qualify for the general residence homestead exemption, the owner must have an ownership interest in the property and occupy the property as the owner’s principal residence. A residence owned by an individual through an interest in a qualifying beneficial trust and occupied by a trustor or beneficiary of the trust may qualify. An owner’s surviving spouse who has a life estate in a residence may also qualify the property for a residence homestead exemption.  An applicant is required to state that the applicant does not claim an exemption on another residence homestead in or outside of Texas. The application must include a copy of the applicant’s driver’s license or state identification card. A chief appraiser is prohibited by law from granting a residence homestead exemption unless the address on the identification provided corresponds to the address of the property for which the exemption is claimed. This requirement may be waived in certain circumstances. This requirement does not apply to a resident of a facility that provides services related to health, infirmity, or aging; or to applicants who are certified for participation in the Attorney General’s Address Confidentiality Program.

 A chief appraiser may also waive this matching Texas ID requirement for an active duty U.S. armed services member or the spouse of an active duty service member if the application includes a copy of the military identification card and a copy of a utility bill for the residence homestead. A chief appraiser may waive the requirement if the applicant holds a specific driver’s license issued for certain judges, U.S. marshals, U.S. attorneys and their family members, certain peace officers or prosecutors and includes with the application a copy of the application for that license.

The exemption applies to those portions of the house actually used as a residence, as opposed to business or other use. The homestead includes up to 20 acres of land and any improvements used for residential purposes.

A property can continue to qualify for a residence homestead exemption if the property owner temporarily stops occupying the property as the property owner’s principal residence under certain conditions. A qualified homeowner does not lose his or her residence homestead exemption if the homeowner does not establish a different principal residence, intends to return and occupy the residence and is temporarily absent for a period of less than two years. The law provides that homeowners in military service inside or outside the United States or in a facility providing services related to health, infirmity or aging may be away from the home longer than two years and still keep the residence homestead exemption. The two year limit does not apply to these homeowners. If this situation pertains to you, please contact the Bexar Appraisal District to discuss the documents needed.

Inherited Residence Homestead

Heir property is property owned by one or more individuals, where at least one owner claims the property as a residence homestead, and the property was acquired by will, transfer on death deed, or intestacy. An heir property owner not specifically identified as the residence homestead owner on a deed or other recorded instrument in the county where the property is located must provide the appraisal district:

• an affidavit establishing an ownership interest in the property;
• a copy of the prior property owner's death certificate;
• a copy of the property's most recent utility bill; and
• a citation of any court record relating to the applicant's ownership of the property, if available.

Each heir property owner who occupies the property as a principal residence, other than the applicant, must provide an affidavit that authorizes the submission of the application.

 Age 65 or Older or Disabled Persons

Texas law requires school districts to offer an additional $60,000 residence homestead exemption to persons age 65 or older or disabled. Any taxing unit, including a city, county, school district or special district, has the option of deciding locally to offer a residence homestead exemption for persons age 65 or older or disabled in an amount not less than $3,000; for a school district, this local option exemption is in addition to the mandatory exemption.

To qualify for the mandatory and local option residence homestead exemption for persons age 65 or older, the owner must be age 65 or older and live in the house. If the age 65 or older homeowner dies, the surviving spouse may continue to receive the local option residence homestead exemption if the surviving spouse is age 55 or older at the time of death and lives in and owns the home.

A disabled person must meet the definition of disabled for the purpose of payment of disability insurance benefits under the Federal Old-Age, Survivors and Disability Insurance Act.

A homeowner does not have to meet the definition of disabled or age 65 or older on Jan. 1 of the tax year, but may qualify as disabled or age 65 or older at any time during the tax year. The exemption applies to the entire tax year as if the person was disabled or age 65 on Jan. 1.

A residence owned by an individual through an interest in a qualifying beneficial trust and occupied by such individual as a trustor or beneficiary of the trust may qualify. An owner’s surviving spouse who has a life estate in a residence may also qualify the property for a residence homestead exemption.

The Tax Code places a tax limitation or ceiling on school district taxes for a property owner who is receiving the age 65 or older or disabled residence homestead exemption. The tax ceiling continues for age 55 or older surviving spouses of individuals who die while qualified for the tax ceiling. These homeowners may also transfer the percent of tax paid, based on their ceiling, when they purchase another home and use it as their principal residence. Tax Code Section 11.26(i) entitles the surviving spouse of an age 65 or older or disabled person to the school district tax limitation on a residence homestead.

A county, city or junior college district can offer a tax limitation on homesteads of taxpayers who are disabled or age 65 or older. The taxing unit’s governing body may adopt the limitation or citizens in the taxing unit by petition and election may adopt the limitation. Once adopted, the Tax Code provides for the tax ceiling for disabled and age 65 or older homeowners and their right to transfer to another homestead in that taxing unit the same benefit of that tax ceiling. It also provides for surviving spouses age 55 or older to retain the tax ceiling. The tax limitation is not an exemption and does not impact the appraised or taxable value of the property.

Manufactured and Cooperative Housing

Manufactured homes can qualify for property tax exemptions if they meet certain requirements. To qualify as a residential homestead, the owner must submit a "Statement of Ownership" and follow specific rules.

To apply for the homestead exemption in Texas, you need to provide one of the following documents along with your application and ID:

1. A copy of the Statement of Ownership and Location, showing that the applicant owns the home and it’s registered as real or personal property with the Texas Department of Housing and Community Affairs.
   OR
2. A copy of the sales agreement, contract, or payment receipt proving the applicant purchased the manufactured home.

If you were not given the necessary documents at the time of purchase and you do not have a way to reach the previous owners, you can request an Affidavit for Owner/Applicant Without Written Ownership Document for Manufactured Home (form 50-114A) from the Bexar Appraisal District. Contact us at 210-242-2432 for more information.

Disabled Veterans 10% to 100% Service-Connected Rating and Surviving Spouses of Disabled Veterans (Partial Exemption)

Texas provides for a disabled veteran exemption if the property and property owner meet the qualifications. A disabled veteran exemption can exempt a portion or the total property value. An exemption amount is determined by the disability rating issued by the U.S. Veterans Administration or the branch of the armed services in which the veteran served. Certain disabled veteran exemptions apply to a qualifying residence homestead, while others can be applied to any one property owned by the qualifying individual.

Tax Code Section 11.22 provides a partial exemption for any one property owned by a disabled veteran. The amount of the exemption varies depending on the disabled veteran's disability rating. The surviving spouse who remains unmarried and surviving children of a disabled veteran may also qualify for an exemption under this section. The application for the exemption under Tax Code Section 11.22 is form 50-135. 

Donated Residence of a Partially Disabled Veteran (or surviving spouse)

Tax Code Section 11.132 provides a partial exemption for a residence homestead donated to a disabled veteran by a charitable organization which may also extend to the surviving spouse of the disabled veteran who has not remarried if the property was the residence homestead of the surviving spouse when the qualifying deceased spouse died and the property remains his or her residence homestead. The amount of the exemption is based on the disabled veteran's disability rating. The application for the exemption under Tax Code Section 11.132 is form 50-114. 

Surviving Spouse of an Armed Services Member Killed or Fatally Injured in the Line of Duty

Tax Code Section 11.133 entitles a surviving spouse of a member of the U.S. armed services killed or fatally injured in the line of duty to a total property tax exemption on his or her residence homestead if the surviving spouse has not remarried since the armed services member's death. The application for the exemption under Tax Code Section 11.133 is form 50-114. 

100% Disabled Veteran Homestead (or Surviving Spouse)

A disabled veteran awarded 100 percent disability compensation due to a service-connected disability and a rating of 100 percent disabled or individual unemployability from the United States Department of Veterans Affairs is entitled to an exemption from taxation of the total appraised value of the veteran’s residence homestead. If these veterans qualify for the exemption after Jan. 1 of a tax year, they receive an exemption for the applicable portion of that year immediately upon qualifying for the exemption. Likewise, if the property no longer qualifies in a year, the exemption is removed for that portion of the year.

The 100 percent disabled veteran exemption extends to a surviving spouse who was married to a disabled veteran who qualified or would have qualified for this exemption if it had been in effect at the time of the veteran’s death. To be entitled to this exemption, the surviving spouse must not have remarried; the property was the surviving spouse’s residence homestead when the veteran died; and the property remains the surviving spouse’s residence homestead.

If the surviving spouse is eligible for the exemption and then qualifies a different property as a residence homestead, the surviving spouse is entitled to the same dollar amount of the former exemption that was last received at the former homestead. The surviving spouse cannot remarry to receive the subsequent exemption. The chief appraiser of the county in which the former residence was located must provide to the surviving spouse a written certificate so that the amount of the exemption on the subsequent qualified homestead can be determined.

Deadlines

 A late application for a residence homestead exemption filed by a disabled veteran for the 100 percent disabled veteran exemption or the donated residence homestead of a partially disabled veteran exemption may be filed up to five years after the filing deadline has passed. The surviving spouse of a 100 percent disabled veteran, donated residence homestead of a partially disabled veteran or the surviving spouse of a member of the U.S. armed services killed in the line of duty may be filed up to two years after the filing deadline has passed.

 Surviving Spouses of First Responders Killed in the Line of Duty

Texas law provides a total property tax exemption for the residence homestead of a surviving spouse of a first responder killed or fatally injured in the line of duty if the surviving spouse has not remarried since the first responder’s death. This exemption applies regardless of the date of the first responder’s death. A letter from ERS (Employees Retirement System of Texas) is required, affirming eligibility as a survivor under Chapter 615 of the Government Code. If the surviving spouse is eligible for the exemption and then qualifies a different property as a residence homestead, the surviving spouse is entitled to the same dollar amount of the former exemption that was last received at the former homestead. The chief appraiser of the county in which the former residence was located must provide to the surviving spouse a written certificate so that the exemption amount on the subsequent qualified homestead can be determined.

Charitable Organizations Generally (Tax Code Section 11.18)

Property owned by qualified charitable organizations is exempt. An organization must meet requirements regarding how it is organized, what it does and how it uses its property. The organization is limited to charitable activities that are listed in Tax Code Section 11.18.

Exemptions for charitable organizations require the property owner to have a charter or bylaws dedicating property to particular purposes and providing for disposition of property upon dissolution. The bylaws must pledge the group’s properties to charitable purposes. The organization may not allow anyone to realize private gain from the organization’s activities. In some cases, particularly involving medical care facilities, children’s homes and nursing homes, questions may involve whether the institution serves people who cannot pay for services as well as those who can.

The exemption applies to property (buildings and land on which the buildings are located, personal property and in some cases an interest in a mineral in place) owned by the charitable organization. The property must be used exclusively by the organization or other equally qualified organizations. If part of the property is leased to or used by a non-qualified person or business, the other use must be limited to activities that benefit the people the organization serves.

Community Land Trusts (Tax Code Section 11.1827)

Real and personal property owned by a community land trust for the purpose of providing affordable housing for low income and moderate-income residents, promoting resident ownership of housing, keeping housing affordable for future residents, and capturing the value of public investment for long-term community benefit is exempt. The exemption must be adopted by the taxing unit’s governing body before July 1.

Once the exemption is allowed, it does not have to be claimed in subsequent years unless the ownership changes or the person’s qualifications for the exemption changes.

To receive the exemption, the trust must meet certain requirements of a charitable organization; own the land for the purpose of leasing it and selling or leasing housing units located on the land; and engage exclusively in the sale or lease of housing as provided for in Local Government Code Section 373B.002. The trust must also conduct an annual audit by an independent auditor and report the audit results to the local governing body and the chief appraiser. The property cannot be exempted after the third year on which the trust acquired the property unless the trust is offering to sell or lease the property or is leasing the property according to Local Government Code Chapter 373B.

Primarily Charitable Organizations (Tax Code Section 11.184)

Real and personal property owned by organizations engaged primarily in performing charitable functions is exempt. Before applying for an exemption with the appraisal district, an organization must obtain from the Comptroller’s office a determination letter stating the organization is engaged primarily in performing charitable functions. The chief appraiser must accept a Comptroller’s office determination letter as conclusive evidence that the organization engages primarily in performing charitable functions and is eligible for exemption. The chief appraiser determines if the organization uses its property for its charitable purposes. An organization is required to obtain a new Comptroller’s office determination letter every fifth year after the exemption is granted. To implement the determination process, the Comptroller’s office has adopted rules and prescribed a form for applying for a determination letter.

The exemption also applies to partially complete improvements or for physical preparation. The exemption for incomplete improvements lasts for three years.

Religious Organizations (Tax Code Section 11.20)

Places of religious worship and clergy residences owned by qualified religious groups are exempt. Religious organizations must be organized and operated primarily for religious worship or the spiritual welfare of individuals. Religious organizations must meet requirements similar to those imposed on charitable and youth organizations.

Generally, if an organization qualifies under this section, it may exempt property of the following types: actual places of religious worship, personal property used at the place of worship, residences for clergy and personal property used at the residences. A religious organization may use its assets in performing its functions or the functions of another religious organization.

Public property owned by the state or a taxing unit and leased to a religious organization may receive the religious organization exemption if the property is used as a place of regular religious worship and meets other Tax Code requirements. The religious organization applies and takes other action relating to the exemption as if the organization owned the property.

A property owned by a religious organization and leased for use as a school may be exempt as a school. A religious organization’s land held for expanding or constructing a place of worship may be exempt, so long as the land produces no revenue during the holding period. The land exemption has a limit of 10 years for contiguous property and three years for non-contiguous property.

The exemption also applies to partially complete improvements or for physical preparation. The exemption for incomplete improvements lasts for three years.

Exemptions for religious organizations require the property owner to have a charter or bylaws dedicating property to particular purposes and providing for disposition of property upon dissolution.

Private Schools (Tax Code Section 11.21)

The school exemption applies to property used for school purposes. As with charitable and religious organizations, the school must use its assets in performing its function or the function of another educational organization. A property owned by a religious organization and leased for use as a school may be exempt as a school.

The exemption also applies to partially complete improvements or for physical preparation. The exemption for incomplete improvements lasts for three years.

Exemptions for private schools also require the property owner to have a charter or bylaws dedicating property to particular purposes and providing for disposition of property upon dissolution.

Public Property (Tax Code Section 11.11)

To qualify for the public property exemption, the state of Texas or a political subdivision of the state must own the property. The property must be used for public purposes such as the health, comfort and welfare of the public. State owned property is taxable if it is rented to a private business that uses it for something inconsistent with the agency’s duties. The property may not be used to provide housing to the public other than students or agency employees. However, if an educational institution uses the property primarily for instructional purposes and secondarily for residences, the property is exempt. Additionally, property held for the benefit of a state junior college, college or university is exempt under the same conditions.

Property of a higher education development foundation or an alumni association located on land owned by the state for the support, maintenance or benefit of a state institution of higher education is exempt provided that the foundation or organization meets the requirement. The organization must be organized exclusively to operate programs or perform activities for the benefit of institutions of higher education. Finally, the property must be used exclusively for those programs or activities.

An improvement is considered owned by the state and property used for public purposes if it is located on land owned by the Texas Department of Criminal Justice, leased and used by the department and subject to a lease-purchase agreement providing that legal title to the improvement will pass to the department at the end of the lease term.

Tangible personal property leased to the state or a political subdivision is exempt if the property is subject to a lease purchase agreement providing that the state or political subdivision takes legal title to the property at the end of the lease term. The exemption ends 30 days after the lease terminates if the state or political subdivision does not take title to the personal property.

Real and personal property owned by a nonprofit corporation engaged primarily in providing chilled water and steam to certain health-related facilities is exempt. The corporation’s property would be considered as if it were owned by the state and used for health and education purposes.  Certain facilities related to transportation leased to a private entity to provide transportation or for utility purposes are also exempt.