Harris County Appraisal District
Deferral of Taxes on Increases
in the Value of Residence
Homesteads
If you are having trouble paying property taxes on your home this year, a little known recent
state law on deferral of taxes may help. This law provides for postponing some of the taxes
due on a principal residence if it is receiving a homestead exemption. If the law applies to
you, by ling a special adavit with the county appraisal district you can postpone paying
taxes on a portion of the increase in your home’s value. Taxes will continue to accrue and
you will owe interest at the rate of 8% per year on the postponed tax amounts. However,
taxing jurisdictions cannot sue you to collect the postponed taxes. The taxes will become
due and must be paid within 30 days of the date you sell the property or no longer occupy
it. You must also pay the remaining amount of your taxes on time every year to keep the tax
benet.
Finding out whether the new law will benet you requires a little math. You need to compare
your home’s previous year’s appraised value to this year’s appraised value. If the value
increased by more than 5% from last year to this year (excluding any improvements you
added to the home between last year and this year), you can take advantage of the new
law. The amount of tax you can defer depends on how great the increase was. Under
the law, you can defer paying taxes on any amount of increase over 5%. For example,
suppose your appraised value last year was $100,000 and your appraised value this year
is $107,000. This represents a 7% increase. A 5% increase would have resulted in a value
of $105,000. The law allows you to pay taxes as if the home’s value was $105,000 and to
defer paying taxes on the remaining $2,000 of value. On the other hand, if your home’s
value increased 5% or less, the law doesn’t apply to you.
If the appreciating residential tax deferral applies to you, you must do three things to take
advantage of it:
1.
Obtain the tax deferral adavit from the appraisal district.
2.
Complete the form, have it notarized, and return it to the district; and
3.
Pay your current property taxes on all but the value over the 5% increase, before
the February 1 delinquency date.
Taxpayers need to be careful about using this type of deferral. It would be best to contact
the tax oces that sent your tax bills and determine how much you can legally defer. Be
especially careful if you have a home mortgage. The mortgage company may have the
right to foreclose if you don’t pay your taxes on time. Finally, remember that deferred taxes
don’t go away. They continue to accrue and draw interest, and may cause an unexpected
problem if you try to sell your home. The best plan would be to discuss your tax deferral
option with both your mortgage company and local tax oces before ling the adavit.
