Facebook
Twitter
Pinterest
Copy Link
Homestead Exemption and Homestead Cap Explained
Market Value
Per the Texas Property Tax Code, all taxable property must be valued at 100 percent of market
value as of January 1 each year. This value is shown on your notice as “Total Market Value of
this Property”. Because it is based on recent sales, the Total Market Value may change upwards
or downwards any amount depending on recent market trends and is not limited to increases of
10 percent or more. It may change as much as the current market changes.
Homestead Limitation (aka Residence Homestead “Cap”)
A homestead limitation is a limitation or cap on the amount of value a property will be taxed
from year to year. The appraisal district identifies the homestead limitation amount as the “Total
Appraised Value (with Homestead Limit)” on your appraisal notice. The limitation slows the
annual increase of a property tax bill by reducing the amount of value subject to taxation. For
residence homesteads, the annual increase is limited to 10% more than the previous year’s
appraised value (plus any new improvements).
For example:
In 2022, a property with a residence homestead has a market value and appraised value of
$100,000. Over the next year, prices in the area have increased and the appraisal district values
the property at $140,000 for tax year 2023. Since the property had a homestead on January 1,
2022, the appraised value can only increase by 10% plus any new construction. The market value
for 2023 would be $140,000, but the appraised value (with homestead limitation) would be
$110,000.
Last Year Value + 10% = Current Appraised Value
$100,000 x 1.1 = $110,000
If the property owner added new improvements in 2022 (for example-a $20,000 pool) the
appraised value would be $130,000.
Last Year Value + 10% + New Imp Value = Current Appraised Value
($100,000 x 1.1) + $20,000 = $130,000
The limitation does not go into effect until the January 1 of the following year the property
qualifies for the exemption.
Example 1: A property owner purchases their property in December of 2021, and they qualify
for their homestead exemption on January 1, 2022. The homestead limitation will not go into
effect until January 1, 2023.
Example 2: A property owner purchases their property in April of 2022, and they qualify for a
prorated exemption on April 5, 2022. The homestead limitation will not go into effect until
January 1 of 2024, one year after the January 1 date the exemption qualified.
If you have any questions, or you’re not sure have filed your exemption(s), call me, I would love to help!
jacky
