HOMESTEAD CAP
Q. What is a Homestead Cap? (Sec. 23.23)
- Cap value applies to residential homesteads only. If this property is your residence homestead, the appraised value may not exceed the lesser of the market value of the property or the sum of:
- 10 percent of the appraised value of the property for the preceding tax year;
- The appraised value of the property for the preceding year; and
- The market value of all new improvements to the property.
- The limitation takes effect to a residence homestead on January 1 of the tax year following the first tax year the owner qualifies the property for an exemption under Section 11.13.
- The limitation expires on January 1 of the first tax year that neither the owner of the property when the limitation took effect nor the owner’s spouse or surviving spouse qualifies for an exemption under Section 11.13.
- The limitation provided by Subsection (a) takes effect as to a residence homestead on January 1 of the tax year following the first tax year the owner qualifies the property for an exemption under Section 11.13. The limitation expires on January 1 of the first tax year that neither the owner of the property when the limitation took effect nor the owner’s spouse or surviving spouse qualifies for an exemption under Section 11.13.
An owner who receives a prorated homestead exemption
is considered to have qualified for the homestead exemption as of January 1st of
the following year. Homestead cap adjustment will only apply after
the exemption is on the property 1 full year.
If you purchased your property after 01/01/21, your homestead is effective 01/01/22. If you continue to own and occupy the property and maintain the exemption, your cap takes effect as to a residence homestead on January 1 of the tax year following the first tax year the owner qualifies the property for an exemption under Section 11.13.
Q. If a property had a homestead cap adjustment last year, should it have one this year?
- The homestead cap adjustment is calculated on a year-to-year basis. If, in the current year, the property reflects no cap adjustment, the current market value is not higher than 10% of last year’s assessed value.
- The calculation is: prior year HS assessed value x 1.1 (100% + 10%) = current year cap assessed value. If the current year cap assessed value is less than the current year market value, the difference is the cap adjustment amount which is not taxed. If the current year cap assessed value is more than the current year market value, the cap adjustment amount is zero and the assessed and market values will be equal. (HB 438) New value added to the homestead will not cap the first year added.
- The HS exemption form does not require applicants to indicate the amount of residential use acreage. Homestead acreage will automatically be flagged up to 20 acres unless the applicant is also applying for Ag use, Commercial use or there are multiple improvements on the account, or the property owner requests that additional acreage not be homesteaded. State law allows up to 20 acres for homestead purposes if not used for any of the above-mentioned reasons.
Texas Tax Code 11.42 (a) eligibility for and amount of an exemption authorized by this chapter for any tax year are determined by a claimant’s qualifications on January 1. A person who does not qualify for an exemption on January 1 of any year may not receive the exemption that year.