Texas Property Tax After 65: The Exemption, the Ceiling and the Deferral

Texas leans on property tax harder than almost any state, and the bill on a paid-off house in Weatherford can be a real burden for a household on a fixed income. The state built several forms of relief into the homestead system specifically for homeowners who are 65 or older or who have a qualifying disability. They are valuable, they stack on top of the regular exemption, and none of them are automatic. Here is what each one does.

Start with the regular homestead exemption

Every benefit here requires that the home be your residence homestead and that the general homestead exemption be in place. If you have never filed for it, do that first; we cover the basics in The Texas Homestead Exemption. Once it is on file, the age and disability benefits attach to it.

The additional exemption

Homeowners who are 65 or older, and homeowners with a qualifying disability, receive an additional exemption amount on top of the general homestead exemption for school district taxes. Many counties, cities and special districts offer their own optional additional exemptions as well, and the amounts vary by taxing unit. An exemption reduces the value the tax is calculated on, so the benefit shows up as a lower bill from each unit that grants it.

You qualify for the age-based exemption for the entire year in which you turn 65. A person who qualifies under both age and disability generally has to choose one for the school district exemption, but the choice does not cost anything since the amounts are the same; the appraisal district can walk through which is better given the local optional exemptions.

The school tax ceiling

This is the benefit with the largest long-term effect. When you qualify for the over-65 or disability exemption, the school district taxes on your homestead are capped at the amount you paid in the year you qualified. From then on, the school portion of your bill cannot rise above that ceiling, regardless of how much the appraised value increases, unless you make improvements to the home beyond ordinary repairs. Some counties and cities have adopted a similar ceiling for their own taxes; whether yours has is a question for the appraisal district.

The ceiling is portable in a limited way. If you move to a new homestead in Texas, you can transfer the percentage of the ceiling to the new home, so a downsizing household does not lose all of the benefit. Ask for the transfer certificate before you move.

The option to defer

Homeowners who are 65 or older, or disabled, can file an affidavit with the appraisal district to defer the collection of property taxes on their homestead. The taxes are not forgiven. They continue to accrue with interest at a modest rate, and they become due when the homeowner no longer owns and occupies the home, typically at sale or death. A deferral also stops a pending tax sale. It is a tool for a household that cannot pay the current bill, not a way to avoid the tax, and it does affect the equity the family eventually receives from the home. Mortgage lenders may have their own requirements, so check before filing.

Surviving spouses

When a homeowner who had the over-65 exemption dies, the surviving spouse can keep the exemption and the school tax ceiling if the spouse was 55 or older at the time of death and continues to live in the home. This does not happen automatically. The surviving spouse has to apply, and the window after a death is exactly when it gets forgotten. Similar protections exist for surviving spouses of homeowners with the disability exemption, with their own conditions.

Qualifying for the disability exemption

For property tax purposes, disabled generally means meeting the definition used by the Social Security Administration for disability benefits, whether or not you actually receive those benefits. The appraisal district will ask for documentation, and an award letter from Social Security is the most common form. Disabled veterans have a separate set of exemptions based on their disability rating, which can be more generous and are applied for separately.

How to apply

All of these are filed with the county appraisal district where the home sits: Parker County for Weatherford, Aledo and Willow Park, Hood County for Granbury, and so on. The application is the same homestead form with the additional boxes checked, plus proof of age or disability. There is no fee. If you qualified in a prior year and did not apply, you can generally file late and have the exemption applied retroactively for a limited number of years, which can produce a refund from the tax office.

Property tax is not part of a federal return, but it is very much part of a retirement budget, and we raise it with clients at the point it applies. If you turned 65 this year, this is the appointment where it comes up. For more on how the bills are calculated in the first place, see How Texas Property Tax Actually Works.

This article is general information, not tax or legal advice. Exemption amounts and optional local exemptions vary by taxing unit and change, so confirm the current figures with your appraisal district.

Turned 65 or dealing with a disability and not sure what your homestead is entitled to? Call RD Precision Tax Service in Weatherford at (817) 480-6649, or request a free estimate. We will point you to the right forms and make sure the rest of your return reflects the year's changes too.