The Common Law

Homestead exemption – why & how?

I just bought a new house, and everyone from my Realtor to my dad has told me to file for a homestead exemption. What is a homestead exemption, and how do I file to get one?

Your dad and your Realtor are smart. As a new home owner, the law allows you to apply for a home owner's exemption on your principal residence, which is generally a good idea.

It's first important to know that not all homes qualify for the home owner's exemption. The home owner must be an individual (homestead exemption is not offered to a corporate or business entity). The home must be the individual's primary residence on Jan. 1 of the tax year. The type of home is pretty flexible, meaning someone can file for and obtain a homestead exemption for a separate structure home, condominium, urban loft, or mobile home. The key component is that the person living in the home owns it.

The biggest advantages to obtaining a homestead exemption relate to reduced taxes. For example, all residential homestead owner's may receive a $15,000 homestead exemption from their home's value for school taxes. Additional exemptions may be available for county taxes, people over 65, and people who are disabled. Finally, having a homestead exemption can help you demonstrate that you used the home as your principal residence for the time needed to qualify for the tax break under federal law, which allows a home owner to avoid paying taxes on the profit made by selling their home.

To obtain the homestead exemption, you must file an Application for Residential Homestead Exemption (the Homestead Application) with the county in which your new house is located. Assuming you are in Austin, you would contact the Travis County Appraisal District (www.traviscad.org) and fill out the Application for Residential Homestead Exemption between Jan. 1 and April 30 of the tax year in which you seek the exemption. The Homestead Application requires that you provide the basics (name and property address) as well as a description of your property and information on other possible exemptions that may apply.

Please submit column suggestions, questions, and comments to thecommonlaw@austinchronicle.com. Submission of potential topics does not create an attorney-client relationship, and any information submitted is subject to being included in future columns.

Marrs, Ellis & Hodge LLP, www.jmehlaw.com.

The material in this column is for informational purposes only. It does not constitute, nor is it a substitute for, legal advice. For advice on your specific facts and circumstances, consult a licensed attorney. You may wish to contact the Lawyer Referral Service of Central Texas, a non-profit public service of the Austin Bar Association, at 512-472-8303 or www.austinlrs.com.

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