What is the Texas Homestead Exemption Act?
The Texas Homestead exemption is a legal rule which is designed to:
- Protect the value of homes from increasing property taxes
- Protect creditors from forcing a sale in certain circumstances
- Give protection for the spouse should the homeowner die
Texas Homestead Exemption allows an exemption from property tax on 20% of the house value. Additional exemptions are made for county taxes, those over the age of 65 and those registered disabled. The property must be the primary residence of the applicant. Texas Homestead Exemption has no dollar value limit but has a 10-acre limit for homesteads inside a municipality and 100-acre limit for those in a rural homestead.
Texas Homestead Exemption also prevents the forced sale of a home to meet the demands of creditors, with the exception of mortgage holders, note holders and tax authorities. Finally, it provides a surviving spouse with shelter.
Texas offers some of the most generous homestead exemption protections in the USA. Although the protection is substantial, it does limit the ability of the homeowner to mortgage the property, as a home equity loan and/or mortgage on a property with Homestead Exemption may not exceed 80% of the value of the property.
