Property Tax Freeze – Moving When Over Age 65

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Published by Zachary Langan, Associate Wealth Advisor

For many seniors in Texas, property taxes are the single largest expense they have. If you are over age 65 and have considered moving, be aware of the possible property tax implications.

You have probably heard that your property taxes were “frozen” once you or your spouse reached age 65. This is mostly true – in most areas, about 50-75% of property tax bills usually go to pay for local public schools. Due to the special Over-65 Homestead Exemption, it is this school portion that does not increase after age 65.

The remaining portions of your tax bill – to cover taxes for your county, city, utility districts, healthcare districts, road development projects, sports stadiums, and more – continue just as they did before. So, if the value of your home increases after age 65, expect those taxes to increase as well.

What happens when you move?

People are more mobile than ever. Life continues to change and offer reasons to relocate, or perhaps buy a new home in the same area – downsizing, leaving the city, moving into something new to decrease maintenance, living close to relatives, or seeking greater accessibility, are just a few examples.

In Texas, the Over-65 Homestead Exemption is portable if you move to a new home. That is, the discount percentage is portable, not the dollar amount of the tax.

For example, if your home is worth $300,000 today but was valued at $180,000 when your taxes were frozen at age 65, you currently have a 40% discount applied to the school portion of your property taxes. It is this 40% reduction that goes with you to your new home.

If you wish to have your Over-65 discount applied to taxes on your new home, be sure to request a “tax ceiling certificate” from the county appraisal district for your old home. You will use this document, which shows your previous discount percentage when applying for the Over-65 Homestead Exemption on your new home.

Just like the regular Homestead Exemption offered to most homeowners in Texas, the Over-65 Homestead Exemption is not automatically applied – be sure to have it added. As time goes on and your property increases in value, the tax reduction will get larger and larger.

One last note – homestead exemptions in Texas are only applied to your primary residence. Investment properties and second homes are barred from receiving this benefit.

Whether property taxes or mortgage choices, purchasing a new home creates many questions and opportunities for financial planning. Give us a call if we can help!

The opinions are those of the writer, and not the recommendations or responsibility of CWM, LLC, or its representatives. This information is not intended to provide specific legal, tax, or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.

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