Markeda Maxie identifies who qualifies for the homestead cap and answer some frequently asked questions like “What does it mean?”, “Why is it applied?”, and “When and how is it calculated?" (3:06 mins.)
When the Harris County economy thrives, property values can increase by 20%, 25% and even 30% in a year. So how can homeowners protect themselves from these increases?
In 1997, Texas voters implemented a “limit” on increases in appraised values for homestead properties. This is commonly referred to as the homestead cap. The cap is especially important in markets with rapidly rising home values.
Hello, I’m Markeda Maxie with the Harris County Appraisal District. Today, I will identify who qualifies for the homestead cap and answer some frequently asked questions like “What does it mean?”, “Why is it applied?”, and “When and how is it calculated?”
Let’s get started.
Appraisal districts are required to appraise properties at their fair market value as of January 1 of each year. You qualify to have your appraised value capped if the property is your primary residence and you have had exemptions in place for two years. This means that the property will be appraised at full market value for the first year that you qualify and receive a homestead exemption.
In the second year, when you qualify for a homestead cap, your market value and appraised value may not be the same. The market value may increase by any percentage over the previous year, but the “cap” makes sure that you are not taxed on an increase of more than 10%. The appraised value can go up a maximum of 10% each year until it reaches the full market value although there are exceptions to this rule.
Let’s look at an example of how this really works.
Let’s say you purchased and moved into your home in 2015. The first year that you would be eligible to receive the homestead exemption would be January 1, 2016, and the cap would not be in place until January 1, 2017. So if 2016’s market value increased from $200,000 to $230,000 in 2017, the appraised value would be limited to a 10% increase. This means your appraised value would be capped at $220,000.
What is the proposed value for 2018 if the market value of $230,000 remained unchanged? If the market value did not increase, then the appraised value would increase to the market value of $230,000.
The cap can be a confusing issue so I hope this video has helped you understand this important way you can save money on your taxes. More information regarding the homestead cap is available on our website at www.hcad.org and you can call our Telephone Information Center at 713-957-7800.
Thanks for watching!