Deferring Payment of Your Property Taxes

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:

  1. Obtain the tax deferral affidavit from the appraisal district;
  2. Complete the form, have it notarized, and return it to the district; and
  3. 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.

Forms

Any forms to be filed with the appraisal district that require notarization can be notarized at the appraisal district office free of charge.

Tax Deferral Affidavit for Appreciating Residence Homestead Value

Tax Deferral Affidavit Over 65 Disabled Homeowner

What the Law Says

Sec. 33.065.  DEFERRED COLLECTION OF TAXES ON APPRECIATING RESIDENCE HOMESTEAD.  (a)  An individual is entitled to defer or abate a suit to collect a delinquent tax imposed on the portion of the appraised value of property the individual owns and occupies as the individual's residence homestead that exceeds the sum of:

(1)  105 percent of the appraised value of the property for the preceding year;  and

(2)  the market value of all new improvements to the property.

(b)  An individual may not obtain a deferral or abatement under this section, and any deferral or abatement previously received expires, if the taxes on the portion of the appraised value of the property that does not exceed the amount provided by Subsection (a) are delinquent.

(c)  To obtain a deferral, an individual must file with the chief appraiser for the appraisal district in which the property is located an affidavit stating the facts required to be established by Subsection (a).  The chief appraiser shall notify each taxing unit participating in the district of the filing.  After an affidavit is filed under this subsection, a taxing unit may not file suit to collect delinquent taxes on the property for which collection is deferred until the individual no longer owns and occupies the property as a residence homestead.

(d)  To obtain an abatement, the individual must file in the court in which the delinquent tax suit is pending an affidavit stating the facts required to be established by Subsection (a).  If the taxing unit that filed the suit does not file a controverting affidavit or if, after a hearing, the court finds the individual is entitled to the deferral, the court shall abate the suit until the individual no longer owns and occupies the property as the individual's residence homestead.  The clerk of the court shall deliver a copy of the judgment abating the suit to the chief appraiser of each appraisal district that appraises the property.

(e)  A deferral or abatement under this section applies only to ad valorem taxes imposed beginning with the tax year following the first tax year the individual entitled to the deferral or abatement qualifies the property for an exemption under Section 11.13.  For purposes of this subsection, the owner of a residence homestead that is qualified for an exemption under Section 11.13 on January 1, 1998, is considered to have qualified the property for the first time in the 1997 tax year.

(f)  If the collection of delinquent taxes on the property was deferred in a prior tax year and the sum of the amounts described by Subsections (a)(1) and (2) exceeds the appraised value of the property for the current tax year, the amount of taxes the collection of which may be deferred is reduced by the amount calculated by multiplying the taxing unit's tax rate for the current year by the amount by which that sum exceeds the appraised value of the property.

(g)  A tax lien remains on the property and interest continues to accrue during the period collection of delinquent taxes is deferred or abated under this section.  The annual interest rate during the deferral or abatement period is eight percent instead of the rate provided by Section 33.01.  Interest and penalties that accrued or that were incurred or imposed under Section 33.01 or 33.07 before the date the individual files the deferral affidavit under Subsection (c) or the date the judgment abating the suit is entered, as applicable, are preserved.  A penalty is not incurred on the delinquent taxes for which collection is deferred or abated during a deferral or abatement period.  The additional penalty under Section 33.07 may be imposed and collected only if the delinquent taxes for which collection is deferred or abated remain delinquent on or after the 91st day after the date the deferral or abatement period expires.  A plea of limitation, laches, or want of prosecution does not apply against the taxing unit because of deferral or abatement of collection as provided by this section.

(h)  Each year the chief appraiser for each appraisal district shall publicize in a manner reasonably designed to notify all residents of the county for which the appraisal district is established of the provisions of this section and, specifically, the method by which an eligible person may obtain a deferral.

(i)  In this section:

(1)  "New improvement" means an improvement to a residence homestead that is made after the appraisal of the property for the preceding year and that increases the market value of the property.  The term does not include ordinary maintenance of an existing structure or the grounds or another feature of the property.

(2)  "Residence homestead" has the meaning assigned that term by Section 11.13.

(j)  An heir property owner who qualifies heir property as the owner's residence homestead under Chapter 11 is considered the sole owner of the property for the purposes of this section.

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