Every year in January I reach out to my clients who have purchased last year to remind them that it’s now time to file their homestead exemption.
First of all what is a homestead exemption? A homestead exemption is a reduction of your home’s value from taxation. For example, if your home is appraised at $100,000 and you qualify for a $25,000 exemption, which is the amount mandated for school districts, you will only pay school taxes on the home as if it was worth only $75,000.
From the definition provided by the state comptroller a Homestead can be a separate structure, condominium or a manufactured home located on owned or leased land, as long as the individual living in the home owns it. A Homestead can include up to 20 acres, if the land is owned by the homeowner and used for a purpose related to the residential use of the Homestead.
Not all homes qualify for homestead exemption. The home must be the homeowner’s principal residence to qualify, and the homeowner must have occupied the residence on January 1 of the tax year.
So if you purchased your home in 2020 now is the time to file your homestead exemption so that you get that benefit for the 2021 tax year
How much can you get for your homestead exemption? Well depending on where you live different taxing entities offer different tax breaks. At a minimum in the state of Texas the homestead exemption grant you a $25,000 reduction on your property value for school taxes. Other taxing districts may offer additional tax breaks but those are on a case by case basis.
In order to get this $25,000 Homestead exemption on your school taxes all you have to do is file an application for a residential home said exemption. You can find this form on the comptrollers website or a lot of local county tax districts allow you to file this online. To find out if your local tax district allows you to do this online just go to google and search your county and then the words appraisal district and it should show up in one of the top search results. So if you’re in Dallas County you were google Dallas County appraisal District.
While you’re on that website of your local tax district see what they have for homestead exemptions and see what they say the process is and if you can send the form to them. When all else fails you can always call your local tax authority and they will give you the instructions on what to do.
Now, the reason I remind my clients in January about filing your homestead exemption is because there is a deadline of April 30th to file your homestead exemption if you want to receive the exemption that tax year.
Now here’s a biggie about Homestead exemptions: They are free to file!
Unfortunately, scammers get ahold of the sales information on your house and send letters out at the beginning of the year telling you to pay them a fee to file the homestead exemption for you. They charge a fee like $50 to do this and it’s totally unnecessary. They send a letter in the mail that looks really official and does not inform you that this is something that’s done for free with the local tax district.
So, save yourself some money in the short and long-term and file your homestead exemption if you qualify and haven’t already.
I hope you got a little something out of this addition of Jennifer the realtor explains Homestead exemption. Be sure to subscribe to this channel to get more local real estate information.
This year I’ve had a bunch of buyers moving to Texas from out of state. One question that gets asked all the time with these out-of-state buyers is, “What’s going on with your property taxes in Texas?”
Texas is one of seven states without a state income tax. (Alaska, Florida, Nevada, South Dakota, Washington, and Wyoming are the others.)
While that’s great for your paycheck, our state and local governments have to get money some way to operate, so they make up for the lack of a state income tax in the form of property taxes. We’re up there with New Hampshire as far as our high property tax rates. These taxes go to pay for schools, roads, police and fire departments, emergency response services, libraries, parks, and other services provided by the local government.
The good news is the sky isn’t falling in Texas. Our property values are still on the affordable side of the spectrum compared to the rest of the United States.
When we look at this affordability distribution score, the least affordable state is, no surprise, California at a score of 0.50 and Iowa and Indiana tie for the most affordable state at 1.17. Texas… well we’re at .82. We’re pretty close to the average for the U.S. which is .85.
As far as our cost of living, we’re below the national average. We rank #19 as the state with the lowest cost of living and we're 4.9. If we’re going to be below average on something, I’m fine with it being on this data point.
So back to these property taxes. First question, how are they determined?
It’s actually the local governments that set the property tax rates. This means there can be big changes in your taxes between cities, counties, and taxing districts. Let’s say you live in a brand new neighborhood on one side of town while your friend lives in an older neighborhood on a different side of town. You will likely have two completely different tax bills.
Your tax bill in Texas lines out what entities are taxing your property and their tax rate. Taxing entities could include the county, the city, the local school district, the local hospital, and the local community college.
The taxing entity takes your appraised property value and subtracts any exemptions you have, divides that result by 100 and multiplies it by the property tax rate to get your total amount of property taxes due.
What are these exemptions? Different exemptions offered are homestead, inherited residence, age 65 or older, disabled persons, veterans,
solar and wind-powered energy device, and charitable organizations and businesses.
The most common one we have in Texas is the homestead exemption. To qualify, all you have to do is have an ownership interest in the property, use the property as your principal residence, and have occupied the home as of January 1 of that year. This exemption offers you a $25,000 reduction on your valuation for your school district taxes. Other taxing units may offer additional benefits with a homestead exemption but those are on a case-by-case basis.
The over-65 or disabled persons exemption gives you an additional $10,000 reduction on your assessed value for school district taxes.
You can visit Comptroller.texas.gov for more details on all available exemptions.
Okay, so you have your taxing entities and your exemptions. So now it’s starting to make a little sense, right? Well, hold on there. I’m going to throw a wrench into the works.
We also have additional land use development taxes. Wait… What?
So, I’m going to get a little technical here. These are levies within defined geographic boundaries designed to raise capital so developers can finance the infrastructure needed to support new developments within those geographic boundaries. So basically, developers pass on the cost of creating new infrastructure for new communities to the homeowners in the form of a land use development tax known as a MUD or a PID.
A MUD is also known as a Municipal Utility District while a PID is known as a Public Improvement District. Some of their differences are in the entity that establishes the district and the entity regulating the district.
Per our property code, a seller must disclose if they’re in one of these districts, so you won’t come in unaware.
So, while no one really gets excited about paying taxes, when you look at the net difference between what you’d pay in an income tax in another state from what you’d pay in property taxes in Texas, a lot of people still come out ahead and save more money by moving to Texas.
Are you one of those folks? If you’re looking to buy real estate in Texas, let’s talk. I specialize in the DFW metroplex real estate market but have a database of great Realtors all over the state so you don’t have to go into this blind.
Contact me to get started on buying a home in Texas or you can go ahead and schedule time on my calendar, click here.
Hello Rockwall! Welcome to the Rockwall Real Estate Market Update. Each month I take the highlights from the news and market data then condense them into a quick update.
I’m Jennifer Shannon. I’m a Realtor with the Patty Turner Group at Keller Williams. Here’s your update for the month now that February’s numbers are in.
Since hitting an amazing low of 2.65% in January, rates have risen more than 30 basis points and buyers are taking notice. The change in the number of buyers in the market is more in line with this same time last year and we just have 1% more buyers in the market. That’s a lot more manageable if we can get more homes listed for sale.
Even with the interest rate slowly ticking up over the last few weeks, the average 30-year fixed-rate mortgage is still at 3.02% with .6% in fees and points.
For this local market data, I use numbers from single-family home sales in Rockwall County. These numbers are based on sales data from February.
The average sales price is at $418,910. That’s a 34% increase from just one year ago.
The number of homes for sale is at 143 homes. We are down 74% in the number of homes available to buy in Rockwall County.
Rockwall County had 138 sales in February, 20% FEWER than last year.
Homes sold 41% faster in February than they did last year, and we averaged 38 days on the market.
Our months of inventory is down more from last month and is now at .6 months. This number tells us that based on current demand, if no new listings came on the market, it would take just about two to three weeks for all of the current inventory to be purchased.
We listed 158 homes in December which is 25% less than last year.
Our average sales price per square foot is at $150 per square foot, a 20% increase from last year.
Well, everyone wants to sell when the market is at the peak. If you’re considering a sale, we’re starting to see signs that the demand sellers have been enjoying might be wavering a little. The fact the number of buyers in the market is no longer severely outpacing what we had last year in addition to the fact sellers tend to prefer to list their homes in the spring, gives me hope that pressure on buyers will ease up a little.
So, if you want to try and get ahead of the curve and sell while the market is hot, or just find out what your home could sell for, let’s talk. You can call me at 214-803-4444 or fill out the form on my website to get an equity analysis. Just go to LivingInRockwall.com and click on the button that says ‘Equity Analysis’.
For more updates you can follow me on Facebook at Jennifer Shannon, Real Estate Broker.
That’s all for now and I’ll see you next month!
Jennifer Shannon is a Texas real estate agent and broker, licensed since 2006.