Home ownership in America has been one of the cornerstones of our economy. When we purchase a home, we spend more money on many products. We buy furniture, appliances, curtains, mini blinds and lawn mowers. We pay for utilities, insurance and property maintenance. We keep hardware stores and appliance repair shops in business. We remodel and update our homes from time to time and we pay property taxes.
I was speaking to a friend of mine recently and he pointed out we have a problem on the horizon for retirees who own their homes. He stated many retirees may not be able to pay the property taxes and keep their homes.
With that thought in mind I did a little research and found there are tax exemptions available for the retired, disabled and veterans.
I looked up the Tarrant County tax website and found the following exemptions, specifically the City of Arlington:
• The General Homestead exemption is 20% of the home’s value with a minimum exemption of $5,000.
• For those that are over the age of 65 there is a $60,000 exemption.
• Disabled person exemption of $60,000. This exemption is probably an either-or exemption and not doubled up with the other exemptions.
• And there are four levels of exemption for Veterans ranging from $5,000 to $12,000.
Property values have increased substantially over the last four to five years. My realtor friends have been starved for home listings to sell. After our building bust, we do not have enough supply of homes for sell. The lack of housing supply and increased demand has caused homes to be sold at a premium. So, property taxes have increased.
To add insult to injury the State of Texas has informed Tarrant County, my county, that property values are undervalued for tax purposes by 25%. I was informed of this at a Chamber meeting some time ago. We will see a continued increase of tax appraised home valuations for the next few years due to the State of Texas (Mandate?). Property taxes will continue to increase.
The property tax exemptions listed above are some help, but may not be enough.
There is another mechanism made available for homeowners age 65 and older or disabled persons.
Texas law permits a homeowner who is 65 or older or a disabled person to defer payment of current property taxes on the person’s residence homestead until he or she no longer owns or occupies the home as a residence. For purposes of this law, a person is considered disabled if he or she is under a disability for purposes of payment of disability insurance benefits under Federal Old-Age, Survivors, and Disability Insurance. Property taxes continue to accrue during the deferral period, and are assessed interest at the rate of 8% per year. Once an over-65 or disability deferral has been granted, additional charges cannot be levied for delinquent penalty and interest.
This mechanism is created much like a reverse mortgage. Please note, if a home owner is over the age of 65 and still has a mortgage on the home, the current mortgage company may not allow the homeowner to take this option since it creates a lien ahead of the mortgage company on the property in the event there is a default.
In summary, if you are over the age of 65 and are feeling the pinch from property taxes you have another tool made available to you.