In Texas, there are ways to lower property taxes through exemptions because of the high property tax rate in the state. However, if you are an individual over the age of 65, you have options to help alleviate the burden of high property taxes.
For individuals 65 and older in Texas, there is no way to freeze all property taxes. However, there is what is called a tax ceiling freeze. This exemption is for school district taxes on the property owner’s primary residence. An application will need to be submitted to qualify.
If you are interested in the tax ceiling freeze on a property and are 65 and older, please read the important information below on what a tax ceiling freeze is and how it works. It is critical to know when you are looking for property for a tax exemption to always consult with a tax advisor to make sure you understand all options based on your certain scenario.
How Does a Tax Ceiling Freeze Work?
The tax ceiling freeze is set at the tax amount paid in the year that the property owner qualified and applied for the age 65 or older exemption. This exemption applies to school district taxes and prevents taxes from being increased when the owners reside in their homes.
Once a person receives a tax ceiling exemption, it can’t expire even if the home is made uninhabitable.
Also, this exemption can only go below the tax ceiling set for school district taxes, but it can’t go above the ceiling.
Who is Eligible for a Tax Ceiling Freeze?
If you live in Texas and are over the age of 65, you can qualify for an exemption that is called a tax ceiling freeze. This exemption helps alleviate property taxes on primary residences.
To be eligible to receive the tax ceiling exemption you will need to apply through your county appraisal district. This application can be done the year you turn 65, and you can receive the benefits that same tax year.
Can a Tax Ceiling Freeze Change?
A tax ceiling freeze can only change when a person continues to reside in a home and has improvements above normal repairs and maintenance (an exception is made if a home was deemed uninhabitable). For example, if an addition to a house is made for a garage or additional room then this could cause the tax ceiling on that property to be raised.
What Happens if You Purchase a New Home and Have a Tax Ceiling Freeze?
If you are 65 and older and have a tax ceiling freeze on your primary residence and purchase a new home, then you can roll over that exemption to the new home. The transfer of the tax ceiling exemption is based on a percentage currently paid versus what the amount would be without a tax ceiling.
An example of this would be if you currently pay $100 with the tax ceiling freeze, but without the freeze, you would pay $400, then the percentage of tax you currently pay is 25%. This percentage would move to your new home in Texas. If the tax ceiling in the new area is higher for school taxes, you would pay 25% of the new amount tax amount.
What Happens When the Property Owner with Tax Ceiling Exemption Dies?
If an individual who had the age 65 homestead tax exemption dies, then the tax ceiling exemption can only be transferred if there is a surviving spouse. For the tax ceiling exemption to transfer to a spouse, that surviving individual must be at least 55 years or older. This individual must also have resided in this homestead before the date of the spouse’s death.
If a home is left to an individual who is not a spouse and is over the age of 55, they would no longer qualify for the tax ceiling exemption. However, if the heirs intend on keeping and residing in the home in Texas, they may have other options to help alleviate property taxes.
Is A Tax Ceiling Freeze the Same as Homesteading a Property?
A Tax Ceiling freeze is the same as homesteading. It is one of the options available for individuals looking to save on property taxes in Texas. However, to receive a tax ceiling exemption, you must meet the qualifications to be eligible for the freeze.
If you don’t meet the qualifications for a tax ceiling freeze but want to lower your property taxes, there are other options that can save you money by homesteading a property in Texas. The most common one is a general homestead which reduces the property tax value on a home so that you pay lower school district taxes.
Conclusion
In Texas, a property owner over the age of 65 can’t freeze all property taxes. However, they do have the option of applying for a tax ceiling exemption which will freeze the amount of property taxes paid to the school district.
This freeze amount is based on the year the individual qualified for the 65 or older exemption and can’t go above the tax ceiling for school district taxes. These exemptions also can’t expire. In the event the property owner passes away the tax ceiling exemption can also be transferred to a spouse that is 55 or older and resides on the property.
