Question: Does it make any difference whether we close on our new house before or after January 1?

Answer: If this new home will be your primary residence, then, yes, it does make a difference. If you own your house as of January 1, you will qualify for the homestead exemption. What does that mean? According to the Texas Comptroller of Public Accounts, a General Residential Homestead exemption excludes a portion of a property’s value from taxation, thus lowering your property taxes.

Marc Archuleta, vice-president and manager of Chicago Title Company, explains, “The county appraisal districts are governed by state law. Their responsibilities include the appraisal of all county residential, commercial, industrial and agricultural property at 100 percent of the market value, as of January 1 of a calendar year. With that data, they manage exemptions and maintain the records, so that taxing jurisdictions can set the rates accordingly.”

The critical dates associated with these matters are:

  • January 1 – Date of Appraisal
  • April 30 – Deadline for filing of exemption applications
  • May 15 – Deadline to file a protest (new date for 2019)
  • August – Certification of Values
  • October – Tax bills are mailed
  • February (of the following year) is the delinquency date, and the penalties and interest apply

In addition to the homestead exemption, which offers a substantial discount to the property taxes (on average of 22 percent), there are several other benefits as well, notes Archuleta.

  • When a property has a General Residential Exemption, there is a 10 percent appraisal increase cap. This is particularly beneficial, when there is an upward market condition, resulting in rapidly increasing property values.
  • There is a $25,000 school tax exemption applied.
  • A school tax ceiling is also applied to property owners with an over-65 or disability exemption when the property is claimed as their homestead.

Archuleta reminds people that it is important to understand that exemptions are not granted automatically and that the necessary application materials must be submitted. The county appraisal district maintains records on millions of properties each calendar year. Because of the sheer volume, property owners should review their tax notices each year to ensure that the proper exemptions they qualify for are being fairly applied each year.

One other reason to close before January 1: Some closing costs might also be deductible come April 15. Consult with an accountant or tax expert.