Property tax
Texas homestead exemption rules
The residence homestead exemption is the largest property tax break most Texas homeowners get, and a rental property can never have it. For investors the rules matter at three moments: buying a house that was someone's homestead, turning your own home into a rental, and house hacking a duplex you live in. This guide covers who qualifies, what the exemption is worth, and what changes when a home becomes a rental.
Rules change often. Exemption amounts were raised by constitutional amendments in 2023 and 2025. Figures below reflect the Texas Comptroller's published guidance and the Tax Code as reviewed on the date at the foot of this page. Confirm current amounts with your appraisal district. This is not tax advice.
Who qualifies
Under Section 11.13 of the Texas Tax Code, a residence homestead is a structure, or a separately secured and occupied part of one, with up to 20 acres of land that is:
- Owned by one or more individuals, directly or through a qualifying trust. Property owned by an LLC, corporation or partnership does not qualify.
- Designed or adapted for human residence and actually used as a residence.
- Occupied as the owner's principal residence. You can claim only one homestead, and the application asks you to confirm you claim no residence homestead exemption anywhere else, in or outside Texas.
That ownership requirement is one reason investors think carefully before deeding a home into an entity. See Texas LLCs for rental property.
What the exemption is worth
| Exemption or limit | Who provides it | Amount or effect |
|---|---|---|
| General residence homestead | School districts (required) | $140,000 of appraised value, following the amendment approved by voters in November 2025 |
| Age 65 or older, or disabled | School districts (required) | An additional $60,000, and a school tax ceiling |
| Optional percentage exemption | Any taxing unit that adopts it | Up to 20% of appraised value, with a $5,000 minimum where adopted |
| Local age 65 or disabled exemptions | Cities, counties and other units that adopt them | Amounts set locally |
| 10% homestead cap | Applies by law | Limits the yearly increase in the homestead's appraised value to 10%, plus new improvements |
The school exemption only reduces school district taxes, which are usually the largest part of the bill. Your appraisal district's website shows which exemptions each taxing unit offers.
How and when to apply
- Use the Comptroller's Form 50-114 (Residence Homestead Exemption Application), or your district's online version. The form requires a driver's license number, personal ID certificate number or Social Security number.
- File before May 1 for an exemption based on your qualification on January 1.
- If you bought during the year, you can receive the general exemption for the part of the year after you qualify, as long as the previous owner did not receive the same exemption that year. Apply before the first anniversary of the purchase (Sections 11.42 and 11.43).
- If you missed the deadline, a late application is accepted up to two years after the delinquency date for that year's taxes (Section 11.431). Taxes already paid on the exempt amount are refunded.
Once granted, the general exemption usually continues without a yearly application. The chief appraiser can ask you to reapply if there is reason to believe you no longer qualify.
How the 10% cap works
Section 23.23 limits how much a homestead's appraised value can rise in a year: no more than 10% above the previous year's appraised value, plus the value of new improvements. The cap starts on January 1 of the tax year after the first year the owner qualifies, so a buyer's first year is taxed at market value. It ends on January 1 of the first year in which neither the owner nor the owner's spouse or surviving spouse qualifies.
Because the market value is still recorded each year, the gap between capped and market value can be large after a few years of rising prices. When the homestead ends, the full market value returns in the next year.
The circuit breaker: the cap for other property
Rentals and other non-homestead real property have a separate "circuit breaker" limit of 20% a year (Section 23.231), for property valued at or below a threshold the Comptroller adjusts for inflation ($5 million for 2024). It takes effect in the tax year after the first year the owner owns the property on January 1, and it ends the year after the owner sells. The Legislature authorized it for the 2024, 2025 and 2026 tax years, and the section is written to expire on December 31, 2026. Check whether it has been renewed before relying on it for later years.
When your home becomes a rental
- Exemptions are set on January 1. Eligibility is generally determined by your qualification on January 1 of the tax year (Section 11.42).
- Tell the appraisal district. Section 11.43 requires an owner whose entitlement to an exemption ends to notify the appraisal office in writing before May 1 after it ends.
- The cap goes with it. The 10% cap expires, and the property is appraised at market value the next year, subject to the circuit breaker in the years it applies.
- Temporary absence is different. A home keeps its homestead character during an absence of less than two years if the owner intends to return and does not establish another principal residence (Section 11.13). Military service and certain care facility stays have separate rules. Renting out the whole home during an absence raises questions to take to your appraisal district.
- Budget for the change. Taxes on a former homestead can rise sharply in the first rental year. Model the bill without exemptions or the cap.
Buying a house that was someone's homestead
The seller's exemptions and cap do not transfer to you. The appraisal district's online record usually shows the exemptions currently on the property. If you are buying it as a rental, estimate taxes on the full market value at the current combined rate, not from the seller's last bill. The property tax guide covers how to build that estimate, and the protest guide explains how to challenge the value once you own it.
Owner-occupied duplexes and rooms for rent
Section 11.13 says a home does not lose its homestead character because part of it is rented to someone else. The exemption, however, does not apply to the value of the part used for purposes incompatible with your own residential use. In practice, the district allocates value between the unit you live in and the rented unit. Ask your district how it will apportion value before you buy.
Common questions
Can an investment property ever get a homestead exemption?
No. The exemption is only for an individual's principal residence. A rental may qualify for the separate circuit breaker limit in the years it is in force.
Can I claim a homestead on a house owned by my LLC?
The statute requires ownership by one or more individuals, directly or through a qualifying trust. An LLC-owned house does not meet that test. Talk to an attorney before transferring your home.
What happens if I keep an exemption I'm no longer entitled to?
The chief appraiser can cancel it and, under Section 11.43, add the wrongly exempted value back to the roll for any of the five preceding years, which produces back taxes. Notifying the district on time avoids the problem.
Does the homestead exemption protect my home from creditors?
That is a different homestead: the constitutional and Property Code protection from most creditors. It has its own rules and does not depend on the tax exemption. An attorney can explain how it applies to you.
Related guides
- Texas property taxes for rental owners
- How to protest a property tax appraisal
- Taxes on rental income in Texas
Exemption forms and guidance: Texas Comptroller, property tax exemptions.
Last reviewed 2026-09-17