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A homestead exemption reduces taxes by lowering a home’s taxable value. For example, if your $50,000 home qualifies for a $10,000 exemption, it is taxed as if it were worth $40,000. To qualify, you must own your home. You may have only one principal residence, so you cannot have more than one homestead exemption. General homestead exemptions apply regardless of your age, and there are additional homestead exemptions that apply only if you are over-65 or meet other tests.
General Exemptions
All school districts served by Montgomery Central Appraisal District offer a $15,000 homestead exemption reduction from the appraised value of a home, and some offer an additional optional percentage homestead exemption reduction of up to 20% of a home’s appraised value. Another benefit of the general homestead exemption, other than a reduction in the value, is it automatically caps the following year's value to 10%. Montgomery County grants a $35,000 Over-65 exemption. Some cities and villages in Montgomery County also offer homestead exemptions.
Additional Exemptions for Homeowners Aged 65
To qualify for an Over-65 exemption, you must meet one additional test in addition to those listed on the homestead page for general exemptions. You may qualify for this exemption only after your 65th. birthday. All school districts grant an additional reduction of $10,000 from the appraised value of the home to homeowners when they reach age 65. Individual school districts have the option to offer greater exemption amounts, but they must offer at least the $10,000 exemption. Added to the $15,000 general exemption, this means you will have at least a $25,000 exemption from school taxes when you qualify.
The law doesn’t require other taxing jurisdictions to offer Over-65 exemptions, but it allows them to do so and some Montgomery County units do. Each taxing unit (other than school districts) can decide whether to offer an exemption. Each unit can also decide how much exemption it wants to offer. Many other taxing units offer Over-65 homestead exemptions. If you qualify for an Over-65 homestead exemption, the appraisal district automatically applies the appropriate homestead exemption for each taxing unit that offers it.
Transferable Over 65 Tax Freeze
When you receive an over 65 exemption for school district tax purposes your school district taxes are automatically frozen at the amount calculated for the first full year of qualification. A new law allows someone receiving an over 65 school district tax freeze to transfer that freeze to a new home. If you are already receiving an over 65 school district tax freeze and you purchase a new home, even if it is in another school district, a percentage of that tax freeze can be transferred to to the new home. The new home must become your primary residence. The percentage transferred is calculated by dividing the frozen school district taxes by the amount of school district taxes that would have been due had there not been a tax freeze in place. The resulting percentage is multiplied against the actual school district taxes that would have imposed on the new home without a tax freeze.
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If you believe you may qualify for either the over 65 exemption or the disabled person's exemption (you cannot receive both) please, contact the Montgomery Central Appraisal District. In some circumstances a disabled person's exemption may be more financially favorable to you!
Surviving Spouse Aged 55 or Older
A constitutional amendment effective for 1996 and later tax years permits certain surviving spouses aged 55 or older to retain a deceased spouse’s over-65 exemption. To qualify:
the surviving spouse must have been at least 55 years old or older when the deceased spouse died;
the property must have been the residence homestead of the surviving spouse; and
the property must remain the residence of the surviving spouse.
Further, recent legislation allows a surviving spouse at least 55 years of age or older, whose deceased spouse would have qualified for the Over-65 exemption but had not applied, to receive the Over-65 exemption if all other qualifications are met.
Types of Tax Relief Available to Over-65 Homeowners
There are four types of tax relief available to over-65 homeowners.
Over-65 homestead exemptions can reduce your tax bill.
The school tax ceiling for over-65 homeowners keeps school taxes from increasing.
Over-65 homeowners may defer actions to collect delinquent taxes on their homesteads.
Over-65 homeowners may pay their property taxes in four installments without penalty or interest.
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