What is Homestead And Who Qualifies For An Exemption
Why Homestead Matters
Many believe that new homebuyers are the only ones who are in “need” for information when it comes to “homestead”. In reality, most homeowners, not just first time home buyers, should be “in the know”. If that is not enough, the best part of this is that this information is not even kept secret. How about that?
Homestead has many definitions if you look in the dictionary. For a homeowner or soon to be homeowner, this definition is most interesting:
“homestead: property that is yourpermanenthome and not a second home or property that you rent to someone else” (1)
This is crucial to understand. When you own a property and use that property as your permanent home, you can claim the “homestead exemption” or “exemptions”.
Why should a homeowner apply for homestead exemptions? Claiming homestead exemptions can shield the homeowner from taxation for a certain value of the home, and offer protections against certain type of debt. In Texas, as homeowner you can claim homestead exemption for a one piece of property of maximum 10 acres in urban areas and 200 acres in rural areas. You cannot claim homestead on more properties at the same time. The timeframe for filing a homestead exemption is January 1st to April 30th. You only have to apply one time for your new home. But you have to apply again if you sell and buy a new property as your residence.
Claiming homestead can protect homeowners from creditors of unsecured debt, like credit card debt, but not from being pursued by a taxing agency, a lender or creditor of a secured debt like the mortgage lenders or mechanics lien, even by HOA for unpaid dues. The homestead protections only apply to the amount of equity the homeowner has in the home.
It is alway best to ask the advice of an attorney for details regarding your specific property.
How to qualify
In order to qualify for a “homestead exemption” in Texas, you must be the owner of your home and live in it, as your primary residence, on January 1st. Besides ownership, adding other criteria as age, veteran status, disability status and more, may be also used to the homeowners advantage.
What does that mean for you? If you are thinking to buy a new home this year, it is not too late to find, close on and move into your new home by January 1st, therefore able to claim your homestead exemptions for your new residence in 2021.
Call me for a free consultation.
Your favorite Real Estate Professional,
Luminita E. Cordes, MBA
Independent Realty
P.S. Update. Homebuyers that acquired their property after Jan 1, 2022 are allowed to file for the homestead exemption during the year they purchased the home. (2)
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(1) https://dictionary.cambridge.org/dictionary/english/homestead
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