If you live in Texas and own a home, a homestead exemption is a perfect opportunity to reduce your property tax bill. Despite its name, you don’t have to own a big spread to qualify for one. Any homeowner can apply for a homestead exemption on a primary place of residence – but don't wait until the last minute to apply.

Exemptions are available in Texas for a variety of groups and entities, including homestead, disabled veterans, productivity (agricultural), some businesses and nonprofits. Once you have an exemption filed on your property, it can lessen the amount homeowners and businesses pay in property taxes, but only if you apply in time. With a deadline of April 30, the due date is fast approaching.

Exemptions are valuable tax-reducing tools because they take away part of the value of your property from taxation, therefore lowering your overall property taxes. For example, if your home is valued at $125,000 and you qualify for a $15,000 exemption, the taxes you end up paying on your home only reflect $110,000, not $125,000. For homeowners, the exemption only applies to your home/primary residence – not to any other property you own.

Exemption requirements
There are a few requirements to quality for a homestead exemption, but they’re easy if you’re already a homeowner. Here’s what’s required:

You must own your home. To qualify for a general or disabled homestead exemption, you must own your home on January 1. If you are 65 years of age or older, you need not own your home on January 1. You will qualify for the over-65 exemption as soon as you turn 65, own the home, and live in it as your principal residence. You will receive the exemption as of January 1.

It doesn’t matter if your homestead is a separate structure, condominium, or a mobile home located on leased land, as long as you own it. For ranch owners, your homestead can include up to 20 acres if the land is used as your yard. A residence can also be owned by an individual through an interest in a qualifying beneficial trust and can be occupied by a trustee of a qualifying trust.

If you are not the sole owner of the home, you will receive only a portion of any qualified exemption, based on your percentage of ownership. For example, you own a 25% interest in a homestead valued at $100,000, for a total value of $25,000. You will receive 25% of a $15,000 school homestead exemption, or $3,750.

You must use the home as your principal residence on January 1. If you have more than one house, you can only get exemptions for your main or principal residence. You must live in this home on January 1 of the tax year.

If you temporarily move away from your home, you can still get an exemption if you don't establish another principal residence and you intend to return. For instance, if you enter a nursing home, your home still qualifies as your homestead if you plan to return. Renting part of your home or using part of it for a business does not disqualify the rest of your home for the exemption.

School taxes (applies to all homeowners): You can qualify for a $15,000 homestead exemption on your home's value for school taxes.

County taxes (applies to all homeowners): If your county collects a special tax for farm-to-market roads or flood control, you will receive a $3,000 exemption for this tax. If you qualify for local-option exemptions for age 65 or older homeowners, or disabled homeowners (next section), you will receive only the local-option exemptions.

Optional exemptions (applies to all homeowners): Any taxing unit, including a school district, city, county, or special district, may offer an exemption for up to 20% of your home's value. The amount of an optional exemption can't be less than $5,000, no matter what the percentage is. For example, if your home is valued at $20,000 and your city offers a 20% exemption, your exemption is $5,000, even though 20% of $20,000 is just $4,000. Each taxing unit decides whether it will offer the exemption and at what percentage. This percentage exemption is added to any other home exemption for which you qualify. The taxing unit must decide before July 1 of the tax year to offer this exemption.

Age 65 or older homeowners: If you are age 65 or older, your residence homestead will qualify for more exemptions.

Disabled veterans/survivors: You may qualify for an additional property tax exemption if you are a Texas resident and are either (1) a veteran who was disabled while serving with the U.S. armed forces or (2) the surviving spouse or child (under 18 years of age and unmarried) of a disabled veteran or of a member of the armed forces who was killed while on active duty.

Veterans with a service-connected disability (or surviving families) can apply for an additional exemption beyond the homestead exemption by filling out the forms and providing proof of disability. Again, those who received this exemption last year don’t need to reapply.

The Texas Attorney General’s Office keeps an eye on these companies and says that companies have sent marketing pitches to make it seem as if they are an “official” taxing authority, saying that their fee must be paid before the homeowner can get an exemption. Other companies will say they’re “tax processing centers” – all of these claims are untrue.

Texas law requires all these companies to make it clear that they are not a governmental agency, but not all of them do so – resulting in many who are confused by the letters and send in fees anyway. Don’t get caught in this trap.

Once again, filing for a homestead exemption is free. You just fill out a simple application from your county’s appraisal district, and mail it in – no charge. For more information, go to the Texas State Comptrollers Web site at www.window.state.tx.us.