A new study has ranked Dallas as the best place for downtown living in the US. The report said Dallas was the best city for easy access to gyms and spacious apartments, offering an average of 995 square feet per-person space. 

As fascinating as these statistics may sound, Dallas is one of the most expensive living options out there for US residents. Buying your own home in a city like Dallas is an achievement on its own. And it is no surprise if you have missed some important information regarding homestead tax exemption amidst all the excitement of closing your home-buying deal, unpacking your stuff, and settling down. 

If you have heard some good things about homestead exemptions but are unsure how they can benefit you as a homebuyer, you have come to the right place. In this homestead exemptions guide shared by Dallas best mortgage brokers, you will learn everything about this specific type of tax benefit Dallas mortgage borrowers can benefit from. 

Homestead Exemptions – Overview

A homestead exemption is a tax break for qualifying homebuyers in Texas. With a homestead exemption, a homebuyer gets tax relief on their primary property, which will be designated as a homestead. 

As a general rule, a homestead can be a leased or owned condominium or a constructed structure that the buyer should use personally. Remember, you can only designate your primary home for homestead even if you own multiple properties in Dallas. The exemption excludes part of your home value from taxation, significantly dropping your property taxes.  

How Does it Work?

Speaking of the specifics, the state’s tax law demands public school districts offer a $40K exemption on “resident homesteads” located in their area. When an appraiser determines the value of your home worth $200,000, you’d be allowed to reduce it up to $25000 under the standard homestead exemption law. This means you’d be paying taxes on $175,000 instead of $200,000. This little reduction will help homebuyers save hundreds of dollars annually, which they can further use to carry out other desired home improvement and renovation tasks.

Please note that the exemption amounts may vary depending on where you live. Thus, examining the ‘Appraisal district’ section of the country’s tax website is highly recommended. 

Eligibility Criteria

You’d be glad to know that, as such, there are no specific criteria to qualify for the $40k standard homestead exemption category. All you need to have is an ownership interest in your property. Also, the designated property must be your principal residence instead of a secondary/vacation home. 

While the standard rule is defined and imposed by the state taxation officials, each county has the right to implement/enforce it differently. Therefore, it is essential to have a detailed talk with your mortgage broker regarding how you can benefit from this law following the rules and regulations imposed by your county. 

Types of Homestead Exemptions Available for Homebuyers

As a homebuyer, you may be entitled to benefit from several types of exemptions. We’re going to have a quick overview of some of the most popular options down below:

School taxes: All homeowners are entitled to receive a $25k exemption on their principal residence for school taxes.

Age 65/disabled exemptions: People aged 65 or older or disabled can qualify for a $10k additional exemption on top of the standard $25k amount. 

County taxes: You can receive an additional $3k homestead exemption if your county collects special taxes.

Homestead Cap Value Defined

Homestead cap value applies to residential homesteads only. It usually goes into effect from the second year once the homeowner has been granted an exemption for their property. If the property falls under the category of a residence homestead, the appraised value may not exceed the sum of 10% of the last year’s appraised value.

How to Apply for Homestead Exemption in Dallas?

Applying for a homestead exemption is easier than you think, assuming you fulfill the basic eligibility criteria. The next thing you’ll have to do is do some paperwork. Again, your county may have some specific rules. But in general, the application process looks something like this:

  • Browse your county’s official tax appraisal website and start following the instructions.
  • Obtain a copy of a property tax form 50-114.
  • Complete the application form by filling out all the necessary details about yourself and your residential property.
  • Submit your application following the instructions provided by your appraisal district.
  • Submit any supplementary documents demanded by your appraisal district.
  • Follow up

Do I Have to Pay a Fee for Filing an Exemption?

No. You don’t have to pay any fee to apply for a homestead exemption in Dallas. You can benefit from this service free of cost if you’re a regular taxpayer. 

In case you receive any email requesting you to pay a fee for homestead exemption, know that the entire process comprises just a few simple steps. And there’s no requirement to pay a fee at any step of the application process. You can also get in touch with your Appraisal District if you have questions or don’t have a clear idea regarding the processing of your homestead application.

Do I Have to Apply Each Year?

No, you don’t have to reapply every year unless your loan Appraisal District sends out a new application for you to complete. This usually happens when you qualify for a new exemption. For example, your Appraisal District may resend an application if you cross 65 and become eligible for the relevant exemption. 

What is the Deadline?

The deadline for homestead exemptions varies by state and county, but it is usually in late spring or early summer. You should check with your local county tax assessor’s office for the specific deadline in your area for 2023.

Homestead Exemption Application Checklist

Proof of ownership of the property

Proof of residency on the property

Identification documents (Driver’s license, passport, etc.)

Completed homestead exemption application form

Deed or recent property tax bill

Any relevant documentation for disabilities or age (65+)

Proof of income 

Military discharge papers (for veterans)

Marriage certificate (for joint ownership)

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