Property Taxes a Worry for Some Retirees

Bryan Pope

Much has been written about the substantial growth in property tax rates over the past 20 years. With the first large wave of baby boomers approaching age 65, some worry that rising property taxes could force them from their homes.

“Retirees living on fixed incomes have struggled with rising property tax bills as their homes increase in value,” said Dr. Charles Gilliland, research economist with the Real Estate Center at Texas A&M University. “Many have grown concerned that tax increases will force them from their homes, even though they have paid off their mortgages.”

In response to these concerns, legislators have devised a number of provisions designed to protect seniors.

“Texans 65 or older qualify for both general homestead exemptions and others specifically designed to help seniors,” Gilliland said. “All owners of qualifying homesteads are eligible for an exemption of at least $3,000 from county taxes in counties that levy taxes for roads and flood control and $15,000 from school district taxes.”

Gilliland said seniors may qualify for an additional $10,000 exemption from school taxes, bringing their tax exemption to at least $25,000. Other exemptions may be available for seniors if local taxing jurisdictions choose to adopt these exemptions.

Homeowners, including seniors, must file applications with the chief appraiser to receive homestead exemptions. If a qualifying individual dies, a surviving spouse can continue to receive the exemptions if he or she is 55 or older and the property is his or her homestead. 

Gilliland said the tax code provides further protection for seniors by limiting school taxes on their homesteads.

“Although the appraisal district continues to appraise and calculate taxes, the school taxes levied on a qualified homestead cannot exceed the amount paid in the first year the owner qualified for the over-65 homestead exemption,” he said.

School taxes cannot be increased above that amount as long as the qualifying owner maintains the property as his or her homestead. And should that taxpayer pass away, his or her qualifying, surviving spouse can continue to receive the limitation.

The property tax code also contains provisions to soften the property tax burden on seniors, from paying taxes in installments to deferring tax collections.

For example, seniors may pay tax payments on a quarterly schedule without incurring delinquent tax penalty and interest.

If the tax burden becomes too onerous, seniors may defer collection of taxes, stop a delinquent tax suit or even stop the impending tax sale of their homestead. To do so, the owner must file an affidavit stating that he or she is 65 or older and that the property is a residence homestead. This deferral also applies to the qualifying surviving spouse.

“A tax lien still applies to the property and the unpaid tax accrues interest at 8 percent per year, but further penalties and the delinquent tax interest is waived,” Gilliland said. “Delinquent tax penalty and interest liabilities incurred before the owner filed for the deferral remain.”

He said this type of deferral continues until 180 days after the property no longer qualifies as the individual’s homestead. Activating this deferral could forestall tax collection until an elderly owner dies, at which time the owner’s estate would face a potentially sizable tax bill plus all accrued interest.

Still, Gilliland said the provision offers some assurance that the elderly will not be forced from their homes to satisfy property tax liens.