What Is a Homestead Exemption—and Why It Matters in Texas?

What Is a Homestead Exemption—and Why It Matters in Texas?

By Christi Weinstein, DFW Real Estate Expert

If you own a home in Texas—or you're thinking about buying one—you’ve probably heard the term “homestead exemption.” It’s one of the most valuable tax benefits available to homeowners, yet many people don’t fully understand how it works or how much money it can save.

As a top-producing Dallas Realtor who guides clients through the purchase, sale, and long-term financial strategy of homeownership, I’m breaking down exactly what a homestead exemption is, why it matters, and how you can make sure you’re getting the maximum benefit for your property.

What Exactly Is a Homestead Exemption?

In Texas, a homestead exemption is a legal benefit that reduces the taxable value of your primary residence.
This is important because property taxes in Texas are based on assessed value—not the price you paid for the home.

When you file for a homestead exemption, you’re essentially telling your county:

“This is my primary residence. Please reduce the taxable value so my property taxes decrease.”

The state requires every school district to offer a $100,000 exemption, and many counties offer additional exemptions for general residents, seniors (65+), disabled homeowners, and disabled veterans.

And the best part?
It’s completely free to file.
(If anyone tries to charge you, it’s a scam.)

Who Qualifies for a Homestead Exemption?

To qualify, you must:

• Own the property AND

• Use it as your primary residence as of January 1 of the tax year

You can only claim one homestead exemption in Texas—your main home. Investment properties, vacation homes, and rental homes don’t qualify.

If you’re moving to North Texas from out of state or shifting from one home to another, this is a great topic to discuss early in the process. I help all my buyers understand their eligibility so they’re ready to file the moment they close.

How Much Money Does a Homestead Exemption Save?

Savings vary depending on county, city, and school district tax rates. On average:

Most DFW homeowners save anywhere from $1,000 to $3,000 per year.

Here’s why:
If your home is assessed at $500,000 and you receive the $100,000 homestead exemption, you are only taxed on $400,000 for school taxes. Seniors (65+) often save even more due to additional age-based exemptions and tax ceilings.

These savings compound over time, especially in an appreciating market like DFW.

Additional Perks: It’s Not Just About Taxes

Most homeowners think the benefit stops at tax savings—but that’s only part of the story.
A homestead exemption in Texas also provides legal protections:

1. Protection from Forced Sale

Your homestead cannot be seized by most creditors. This is one of the strongest homestead protections in the country.

2. Limits on Annual Increases

Perhaps the biggest long-term benefit:
Your taxable value can’t increase more than 10% per year, regardless of how fast values rise.

In a competitive market like Dallas, where appreciation can jump quickly, this protection keeps your property taxes predictable and manageable.

How and When Do You File?

You can file your homestead exemption:

• Anytime after January 1

• Once you’ve lived in the home as your primary residence

• Through your county appraisal district’s website (Dallas, Collin, Tarrant, Denton, Kaufman, Rockwall, etc.)

You’ll need:

• Your Texas driver’s license

• And the address on your license must match the home address

It’s simple, fast, and again—free.

I walk my buyers through filing immediately after closing to ensure they don’t miss out on potential savings.

Why Your Homestead Exemption Matters—More Than You Think

Whether you're a first-time buyer, an investor transitioning a rental into your primary, or a long-time homeowner who hasn't filed yet, the homestead exemption matters because it:

• Lowers your annual property tax bill

• Protects your home from creditors

• Keeps your taxable value from skyrocketing

• Puts more money in your pocket each year

• Makes long-term homeownership in North Texas more affordable

In a high-growth region like DFW—where strong schools, rapid job growth, and rising property values are the norm—the homestead exemption is a critical part of your financial strategy as a homeowner.

Thinking of Buying, Selling, or Understanding Your Tax Benefits? Let’s Talk.

As a Dallas Realtor who studies this market daily, I help my clients navigate every aspect of homeownership—from smart purchases to long-term tax planning and value protection.

If you have questions about your homestead exemption, your property valuation, or your next move in North Texas, I’m here to guide you with expertise, clarity, and strategy.