Texas Homestead Exemption

Texas offers a unique application of homestead protection. The protection is very substantial but has its limitation on the ability of the homeowner to mortgage their homestead.

The Texas Homestead Exemption began as a protection for the wives and children of early settlers in the state. This was established as protection should the husband become involved in activities that could lead to the financial devastation of the family. The wives and the children would also be secure in their home in the instance of the death of the husband and would not be able to be removed because of an improper or manufactured claim of debt owed by the husband. The exemption remained virtually unchanged.

There are newer applications of the act that aid in more modern situations. The homestead law prevents creditors from forcing the sale to satisfy debts, except in the case of a mortgage holder, taxing authority, or holder of a note for home improvements. It is also difficult to give up homestead protection to borrow against its equity. An owner who desires to maintain property ownership and be able to borrow against its equity requires the individual to move out of the property and demonstrate that it is being used to generate income as a rental and that they have established homestead in a different home.

Due to this, home equity loans were not valid in Texas until an amendment to the constitution was made in January 1998. These loans are restricted by a variety of requirements because of this. Many other states may not have these restrictions. The amount of the loan plus the balance of the first mortgage is not allowed to exceed eighty percent of the property value. This leaves twenty percent as an equity cushion at the time of the second lien.

You may be able to apply for homestead exemptions on your principal residence. Because of this, the homestead exemption removes a part of the home taxation value and will then lower your taxes. To qualify the home, a homeowner must be an individual and use the home as their main residence on January 1 of the tax year. This is not required if you are age 65 or older. The homestead may also be a separate structure such as a condo or manufacture home that is located on leased land, as long as the individual in the home owns it. The homestead may include up to twenty acres. The land must be owned by the homeowner and be used as a yard or other purpose related to the use of the homestead.

Individuals may also be eligible for an exemption if they are unable to gain work due to physical or mental disability or you are 55 years old and blind and unable to work due to the blindness. You must meet the Social Security definition for disabled in order to qualify.

In order to qualify for the disable veteran exemption, the individual must be a veteran who was disabled while serving in the armed forces, the surviving spouse or a child under 18 and unmarried of a disable veteran or of a member of the armed forces who was died during active duty.

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