Ask The Tax Doctor: What’s That 65 Homestead Exemption? Sure is Fuzzy…

A reader writes, our Tax Doctor Tiffany Hamil responds:

Dear Candy: I am confused by the age 65 homestead deal in our state. Is it the same in each county? When you turn 65 do you get a break on your property taxes or are they just frozen? I understand this is because property taxes support public schools, or at least initially they did, and the philosophy is that once we hit 65 we have no more children in the public schools. We are 60 and trying to figure out if we should remain in our home for another five years to get this benefit, or move now. Our home is on the tax rolls at $1.29. Thanks!

Obtaining an “Over 65 Exemption” does 2 things:

1. You receive an additional exemption off of your appraised value. The State mandates an additional $10,000 exemption amount for school districts, but the actual exemption amount varies not just county to county, but from taxing entity to taxing entity. Most homeowners in Dallas are in 5 different taxing entities. The exemption in Dallas could vary from $3,000 to $69,000.

2. The Over 65 Exemption also establishes a CEILING– It is a limit on the amount of taxes you must pay on your residence. If you qualify your home for a 65 and older or disabled person homestead exemption for school taxes, the school taxes on that home can’t increase as long as you own and live in that home. The tax ceiling is the amount you pay in the year that you qualified for the 65 or older or disabled person exemption. The school taxes on your home may go below the ceiling but not above the amount of the ceiling. However, if you improve the home (other than normal repairs or maintenance), the tax ceiling may go higher because of the new additions. For example, if you add on a garage or game room to the house after you have established a tax ceiling, the ceiling will be adjusted to a higher level to reflect the value of that addition.

If you are nearing age 65 and are considering relocating, it is advisable that you examine not only the tax rate, but also the exemption amounts for the future homestead. The tax tables can be obtained at the appraisal district’s website. If these tax tables look like mumbo-jumbo to you, call our office and we can assist with this analysis.

-Tiffany Hamil.