What does a homestead exemption protect?

A residence homestead exemption reduces the value used to calculate certain property taxes. The home must qualify as your principal residence. For school taxes, the $140,000 general exemption reduces the taxable value for a qualifying owner (Texas Tax Code, Section 11.13). Other taxing units can offer their own exemptions, so the amount of taxable value can differ from one line on a bill to another. The Texas Tax Code sets out the qualifications and school exemption.

The separate appraisal limitation is often called the 10% cap. It limits growth in appraised value using the prior year’s appraised value, plus that percentage and the value of new improvements, with market value used if lower (Texas Tax Code, Section 23.23). It is not a promise that your tax bill will rise by no more than that amount. Tax rates, exemptions and improvements can affect the bill. The Texas Comptroller explains how the limitation works.

Look at both the market value and the capped appraised value on your appraisal record. A gap between them can matter to a buyer planning future taxes. The sale price is not automatically the appraisal district’s new value. I believe in protecting your bottom line and helping you reach the finish line.

What happens during the year you sell?

Texas generally determines exemption eligibility as of January 1, and property is generally appraised at market value as of January 1. The seller’s residence homestead exemption is generally reflected on the bill for the sale year when the seller qualified at the beginning of that year. The general rule for prorating an exemption lost during a year excludes residence homesteads, as Section 26.10 explains (Texas Tax Code, Section 26.10).

Your appraisal limitation does not disappear on the closing date. Under Section 23.23, it expires on January 1 of the first tax year in which neither the owner when the limitation took effect nor that owner’s spouse or surviving spouse qualifies. In an ordinary sale where those owners no longer qualify, that is the January following the sale. The buyer does not inherit your cap (Texas Tax Code, Section 23.23). The district determines the later market value; it is not automatically the purchase price.

The buyer’s own cap starts on January 1 of the tax year following the first year the buyer qualifies, subject to the statutory rule for a partial-year exemption. That means a buyer should budget for a possible change after the seller’s limitation expires. The appraisal district’s specific account will give you the details behind the seller’s bill.

If you stop occupying a home before the sale, tell the district about the facts. The temporary absence rules may preserve homestead character in certain circumstances, but establishing another principal residence changes the analysis. A seller who qualifies a different home for an older or disabled person’s exemption during the same year can have a special adjustment on the former home under Section 26.10(b).

How are property taxes handled at closing?

Under the TREC resale contract, Paragraph 13, current-year taxes are prorated through the closing date. The calculation may consider changes in exemptions affecting that year’s taxes. If current-year taxes vary from the amount used at closing, the parties adjust when the statements become available. If the taxes remain unpaid at closing, the contract provides for the buyer to pay them (TREC, Form 20-19). Read the signed contract and settlement statement for your transaction.

A proration allocates a shared annual expense between buyer and seller. It does not transfer your exemption to the buyer. The closing statement can use an estimate because the final bill may not yet be available. Keep the statement and ask the title company what figures were used, who will pay the bill and how an adjustment will be handled. Discuss any questions about the contract with your agent or attorney. I believe in taking a move one step at a time.

A worked Prosper example

For illustration, use a Collin County home in Prosper ISD with an example appraised value of $840,125, which is Redfin’s September 2026 Prosper median sale price, an unofficial market figure used here only as an input and not an appraisal, general homestead exemptions and no cap or older-owner adjustment. The Collin County 2026 tax table supports an estimated annual total of $13,663.71 for the school district, town, county and college. It uses the applicable rates and exemptions for each unit (Collin County Tax Assessor, 2026). Other taxing units may apply to an actual address.

Suppose the closing allocation assigns exactly half the year to each party. Half of that estimated annual tax is $6,831.86 after rounding. The seller’s estimated share would be credited to the buyer on that assumption; the buyer would then pay the bill if unpaid at closing, subject to the contract and later adjustment. This is an arithmetic illustration, not a quote for a particular closing. The actual day count, closing date, exemptions and final statements will control the calculation.

For local context, compare the taxing units in Frisco property taxes and McKinney property taxes. A city name alone does not establish every unit on a property’s bill, so check the account for the actual address.

What does the buyer need to file?

The buyer applies for their own residence homestead exemption with the county appraisal district. The Comptroller homestead application is filed with the district, not the Comptroller. The application asks about the property and the applicant’s qualifications; the Tax Code also addresses identification. In Collin County, start with the property’s appraisal district record and follow the district’s filing instructions.

For ordinary eligibility at the beginning of the tax year, the application is generally due before May 1. For an eligible partial-year claim after acquisition, the deadline is before the first anniversary of acquisition (Texas Tax Code, Section 11.43). A late homestead application can be filed no later than two years after the tax delinquency date; the chief appraiser must accept it and approve or deny it. Do not wait for a reminder to check the account.

A buyer who acquires and qualifies after January 1 can receive the general exemption for the applicable part of that year only if the previous owner did not receive the same exemption for that year. If the seller received it, the buyer generally applies for the next qualifying year. The partial-year rule has exceptions for certain additional exemptions, so check the district’s guidance for your circumstances.

As the seller, you also have a notice obligation: when entitlement to an exemption that is not claimed annually ends, notify the appraisal office in writing before May 1 after your entitlement ends (Tax Code Section 11.43(g)). If you close between January and April, do not assume you have until the next calendar year; the simple course is to send the notice soon after closing. The application form repeats that duty. Confirm the district’s preferred delivery method and keep a copy of your written notice before May 1.

Can an older owner’s tax ceiling move?

The school tax ceiling for a qualifying older or disabled owner is a different protection from the general exemption and appraisal cap. Under Sections 11.26 and 11.261, a qualifying school ceiling can move to a later Texas homestead as a proportional limit. It is based on the relationship between the tax actually imposed on the former home and the tax that would have been imposed without the ceiling. It is not simply the same dollar amount carried to the new home (Texas Tax Code, Section 11.26).

Discuss the new application with the district for the new home. County, city and junior college ceilings have their own rules where adopted. Our guide to transferring an over-65 property tax ceiling in Texas walks through the distinction. If you sell and qualify another home in the same year, ask about the special former-home adjustment as well. Request a certificate from the former district’s chief appraiser.