My wife and I just purchased a new home in November, and the experience is reminding me of the many pitfalls that are out there to take advantage of homebuyers. With that in mind, this is the first in a series of posts about the raw deals to watch out for in buying a home.
The first pitfall I’ll discuss is homestead exemption filing services. Especially first-time homebuyers may know what a homestead exemption is and that it can save them money, but will be under the mistaken notion that getting a homestead exemption is a difficult process. Preying on that notion are homestead exemption filing services that mail offers to file the papers for a homestead exemption on your property for a modest fee of $35 to $100 in most cases. Filing for a homestead exemption is not hard, and paying someone else to do it is a complete waste of money.
First off, let’s discuss what a homestead exemption is. A homestead exemption is simply a portion of the value of your home that is not subject to property tax. The amount that is covered under a homestead exemption will vary based on the rules of the various tax jurisdictions you are subject to (i.e., for us in Texas the county exemption amount is different than the School District exemption amount). You will ultimately pay property tax on the appraised value of your property less the homestead exemption amount.
So how do you file for a homestead exemption? Generally you file a short form, usually to a tax assessor’s office or county appraisal district, on which you provide your name, the location of the property, your contact information, and a certification that the property is your primary residence. For our home in Texas, the form is a single page that took less than five minutes to complete. You can likely find instructions online for filing a homestead exemption by just Google searching the phrase “homestead exemption” and your county’s name. If not, find a phone number for your local tax assessor or appraisal district and they can point you in the right direction.
