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The Texas Homestead Exemption
Texas offers a unique application of homestead
protection. The protection is very substantial but has its
limitation on the ability of the homeowner to mortgage their
homestead.
The Texas Homestead Exemption began as a protection
for the wives and children of early settlers in the state.
This was established as protection should the husband become
involved in activities that could lead to the financial devastation
of the family.
The wives and the children would also be secure
in their home in the instance of the death of the husband
and would not be able to be removed because of an improper
or manufactured claim of debt owed by the husband. The exemption
remained virtually unchanged.
There are newer applications of the act that
aid in more modern situations. The homestead law prevents
creditors from forcing the sale to satisfy debts, except in
the case of a mortgage holder, taxing authority, or holder
of a note for home improvements.
It is also difficult to give up homestead protection
to borrow against its equity. An owner who desires to maintain
property ownership and be able to borrow against its equity
requires the individual to move out of the property and demonstrate
that it is being used to generate income as a rental and that
they have established homestead in a different home.
Due to this, home equity loans were not valid
in Texas until an amendment to the constitution was made in
January 1998. These loans are restricted by a variety of requirements
because of this. Many other states do not have these restrictions.
The amount of the loan plus the balance of the
first mortgage is not allowed to exceed eighty percent of
the property's value. This leaves twenty percent as an equity
cushion at the time of the second lien.
You may be able to apply for homestead exemptions
on your principal residence. Because of this, the homestead
exemption removes a part of the home's taxation value and
will then lower your taxes.
To qualify the home, a homeowner must be an
individual and use the home as their main residence on January
1 of the tax year. This is not required if you are age 65
or older. The homestead may also be a separate structure such
as a condo or manufacture home that is located on leased land,
as long as the individual in the home owns it.
The homestead may include up to twenty acres.
The land must be owned by the homeowner and be used as a yard
or other purpose related to the use of the homestead.
Individuals may also be eligible for an exemption
if they are unable to gain work due to physical or mental
disability or you are 55 years old and blind and unable to
work due to the blindness. You must meet the Social Security
definition for disabled in order to qualify.
In order to qualify for the disable veteran
exemption, the individual must be a veteran who was disabled
while serving in the armed forces, the surviving spouse or
a child under 18 and unmarried of a disable veteran or of
a member of the armed forces who was died during active duty.
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