PROPERTY TAX DEFERRALS
If you are having trouble paying property taxes on your home this year, there is a law that may provide limited help.
The law applies only in a few cases, and the provisions are not well known. If the law applies to you, you can postpone paying taxes on a portion of the increase in your home’s value by submitting the appropriate form to the Travis Central Appraisal District. 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 benefit.
Finding out whether the law will benefit you requires a little math. You need to compare your home’s appraised value for the prior year to its current appraised value, according to the appraisal district. If the value increased by more than 5% from prior to current year (excluding any improvements you added to the home), you can take advantage of the 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 prior year’s appraised value was $200,000 and the current year’s appraised value is $225,000. This represents a 12.5% increase. A 5% increase would have resulted in a value of $210,000. The law allows you to pay taxes as if the home’s value was $210,000 and to defer paying taxes on the remaining $15,000 of value. On the other hand, if your home’s value increased by 5% or less, the law doesn’t apply to you.
If the law applies, you must do three things to take advantage of it:
- Obtain the tax deferral affidavit from the appraisal district;
- Complete the form, have it notarized, and return it to the district; and
- Pay the current taxes on all but the value over the 5% increase before the delinquency date. The delinquency date is January 31st of each year.
Taxpayers need to be careful about using the deferral. Don’t rely on your own calculations and contact the tax offices that sent you the tax bills to determine how much tax you can legally defer. Be careful if your home has a mortgage. The mortgage company may be able to foreclose if you don’t pay all your taxes on time. Finally, remember that the deferred taxes don’t go away. They continue to accrue and to draw interest, and they may provide an unexpected problem if you try to sell the home. We recommended discussing payment problems with the taxing units before filing the new affidavit.
Age 65 or Older Deferrals
If you are a property owner who qualifies for the Age 65 or Older or the Disability exemptions, you may defer or postpone paying any property taxes on your home for as long as you own and live in it. This deferral only postpones your taxes; it does not cancel them. Your property taxes accrue five (5) percent interest annually until the deferral is removed. When the property is sold or the ownership is transferred to the estate/heirs, the taxes and accrued interest become payable.
Visit our forms library to download related documents.
Any forms to be filed with the appraisal district that require notarization can be notarized at the appraisal district office free of charge.
FREQUENTLY ASKED QUESTIONS
Penalty and interest charges begin accumulating on most unpaid tax bills on February 1 of each year.
Taxes are due when you receive your tax statement around October 1st. You have until January 31st of the following year to pay your taxes at the Tax Collector’s Office.
TCAD processes the deferral request and sends the information to the Travis County Tax Assessor’s Office. You may contact the tax office with any concerns or questions you may have.
Property is taxed by the authority of the Texas Constitution. The Constitution sets forth five basic principles for property taxes in Texas.
- Taxes must be equal and uniform. No single property or type of property should pay more than its fair share.
- Property must be appraised on its current market value meaning the price that it would sell for on the open market when both the buyer and seller seek the best price and neither is under pressure to buy or sell.
- Each property in a county must have a single appraised value. This is guaranteed by the use of the county appraisal districts.
- All property is taxable unless federal or state law exempts it from the tax.
- Property owners have a right to reasonable notice of increases in their appraised property value.
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