Homestead Exemptions for Jointly Owned Property

Texas Homestead Exemptions for Jointly Owned Property


Texas is unique in its sacred protection of the homestead. The Texas homestead laws are found in Texas Constitution Article XVI, Section 50 and outline the unique protections available to the homestead of a family or single adult. The benefits of Texas homestead laws provide both a tax exemption to remove part of the home’s value from taxation and prevents the homestead from being subject to forced sale by creditors. To qualify as a homestead, the owner must be an individual (not a business entity), and that owner must use the home as his or her principal residence.

Co-Owners Who Both Use the Property as a Principal Residence

While the basic knowledge of homestead protection is well known and understood by most married couples and single individual homeowners in Texas, what is less known is how the homestead exemption can apply to two unmarried co-owners of a home. Section 11.13(h) of the Texas Tax code states that unmarried, joint owners of a home cannot each receive a homestead exemption for the same residence for the same year.

What this means is that when two unmarried people co-own a home, they cannot both individually apply for their portion of the homestead exemption on the same home in the same year. However, two co-owners may ensure that the entire house is covered under the homestead exemption by applying together for the exemption. Both owners must sign the application form and, if both owners otherwise qualify, the homestead exemption will be granted for the entire home.

This process is as simple as any other married couple or single individual applying for the exemption. Two co-owners may complete the required form known as the “Application for Residential Homestead” which may be found on the appropriate county appraisal district website. The co-owners must list both of their names and the percent ownership interest they each hold.

Co-Owners Where Only One Owner Uses the Property as a Principal Residence

In some situations, a property can be co-owned by two unmarried individuals, but only one of those individuals is using the home as a principal residence. It is important to note that in this situation, the individual who wants to apply for a homestead exemption for the property as his or her principal place of residence will only receive the exemption for the fraction of what he or she owns.

Section 11.41 of the Texas Tax Code provides that a qualifying individual who owns less than 100% of a property will receive a reduced exemption based on the fraction he or she owns. For example, if a co-owner owns a 50% interest in the property and a $40,000 residence homestead exemption is offered by a school district for school taxes, the co-owner will receive one-half, or $20,000 of that exemption.

The Texas homestead laws can be complex, and it is important that you contact an experienced real estate lawyer if you have any questions or concerns about these issues.

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