Mary Smith’s will left her homestead to her son, Gerry, and daughter, Tammy, in equal shares. After Mary’s death, Gerry moved into the home and continues to live there. Since the property ownership is in both Gerry and Tammy’s names as tenants in common, will the homestead exemption for ad valorem (property) taxes be applicable to all, one-half or none of the property?
The Texas homestead exemption lowers the ad valorem or property taxes assessed on the property that qualifies as a residence. School districts are mandated to offer a homestead exemption for their portion of the property tax. Other taxing units have the option of offering up to 20 percent of the total value of the property as an exemption.
Typically, only property which is the homeowner’s principal residence would qualify for a homestead exemption. The homeowner must be an individual - a corporation or other business entity will not qualify. In general, the property must have been the principal residence on January 1 of the tax year to qualify. However, those sixty-five years of age or older and those who are disabled are exempt from this January 1 requirement.
The 2019 Texas Legislature passed SB 1943, which becomes effective September 1, 2019. This law provides that “heir property,” defined as real property acquired by will, a transfer on death deed or by intestacy by tenants in common, can claim the homestead exemption if one or more of these persons claims the property as residential homestead. The whole property is entitled to the exemption, even if all of the tenants in common are not residents. In other words, for purposes of the homestead tax exemption, the property is treated as if it were owned entirely by the heir who is claiming it as a residence.
The change in the law created by SB 1943 does not affect the title ownership of the property. Its scope is limited to the tax exemption status.
Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives in beautiful Somervell County, near Chalk Mountain.