Understanding Texas Property Tax Deferment Options

If you’re a Texan homeowner aged 65 or older or qualify based on disability, you’ve likely heard whispers of a property tax deferment option. It’s true, and it can be a game-changer in managing your finances. However, like any financial decision, it’s not a one-size-fits-all solution. In this in-depth exploration, the Home Tax Solutions team aims to shed light on the nuances of Texas property tax deferrals to help you make an informed choice that suits your unique circumstances.

What Exactly is a Property Tax Deferment?

Let’s start with the basics. If you’re over the age of 65 or meet the Social Security Administration’s definition of disabled, you have access to a special Homestead Exemption in the Lone Star State. This exemption can significantly reduce the portion of your home’s appraised value that is subjected to property taxes. This reduction can make a substantial difference for homeowners, allowing them to better manage their property tax obligations. Typically, most county tax offices will require homeowners to apply for the Homestead Exemption before considering a property tax deferment.

But what if the Homestead Exemption isn’t sufficient to cover your delinquent or current property taxes? That’s where property tax deferment comes into play. These deferral programs allow you to postpone the repayment of your property taxes as long as you continue to reside in your home. The beauty of this system is that you aren’t required to repay these deferred taxes until you either sell your home or are no longer the homeowner. However, it’s essential to note that any assessed penalties and fees on overdue property taxes will remain in effect, and an 8% per year interest rate will be assessed on the deferred amount.

Who Qualifies for Property Tax Deferment in Texas?

Property tax deferment may be a viable option for a range of homeowners, including:

  • Those aged 65 or older.
  • Individuals who meet the disability criteria defined by law.
  • Disabled veterans as defined by law or their unmarried surviving spouses or unmarried children under the age of 18 if there is no surviving spouse.
  • Unmarried surviving spouses or unmarried children under the age of 18 of an armed service member killed on active duty.
  • Homeowners facing a property appraisal value increase of greater than 5% from one year to the next. (This particular deferral option has its limitations.)

For individuals with disabilities, meeting the requirements set by the Social Security Administration is crucial. According to the SSA, a person must have a medically determinable mental or physical impairment that prevents them from engaging in gainful employment. This disability should be expected to last for at least 12 months or until the end of the person’s life.

However, it’s worth noting that the 5% appraisal value increase limitation doesn’t apply to homes that have undergone significant improvements. If your home’s property value increases by more than 5% in a single year without substantial changes or renovations, you’ll be required to pay taxes on the amount exceeding the 5% increase. The good news is that property taxes on the remaining amount of increase can still be deferred and repaid with terms similar to traditional deferrals.

How Do You Apply for Property Tax Deferment in Texas?

Applying for property tax deferment in Texas involves a series of steps and paperwork. You’ll need to complete one or more of the following forms, which can typically be found at your county tax assessor collector’s office:

  • Application for Homestead Exemptions (required by most county tax offices before filing for deferral).
  • Affidavit of Disability (requires the Social Security Administration’s Disability determination letter and/or a Physician’s Statement Verifying Eligibility for Disability Exemption).
  • Over-65 and Disabled Tax Deferral Affidavit.
  • Tax Deferral Affidavit for Appreciating Residence Homestead Value.
  • Appraisal Increase Deferral Affidavit (with verification from the tax office regarding legal maximum deferral amounts).

What Happens When You’ve Deferred Your Loan But Can’t Pay it Back in Full?

The timeline for repayment of deferred property taxes can be critical. Typically, when your home is sold or changes ownership, the deferred property taxes become due within 180 days. In most cases, the sale price of the home covers these taxes. However, if this isn’t the case, or if you inherit a home with deferred taxes, or you simply want to explore alternatives to deferment, the Home Tax Solutions team is here to assist. With five locations spread across the state of Texas, there’s a Home Tax Solutions team near you ready to provide guidance on repayment options and help you navigate the complexities of property tax deferment.

Getting to know more about the repayment of deferred property taxes or finding solutions to break free from the cycle of home tax debt is simple. You can reach out to us by completing our online form or giving one of our offices a call. At Home Tax Solutions, we’re here to help you achieve financial peace of mind!