Defer Your Property Tax and Save

Every year at the same time, Texas property owners have the same exciting event to look forward to. No, it is not their birthday, the arrival of the Easter Bunny, or Santa Claus making his way down the chimney. It’s the arrival of the financial grim reaper himself, the modern-day Scrooge, that inscrutable, always-with-his-hand-out, tax man himself.

As Benjamin Franklin so aptly stated  in a letter to Jean-Baptiste Leroy in 1789, “In this world, nothing can be said to be certain, except death and taxes.” Yet also certain is the pain and sticker shock said homeowner receives upon peeling open the envelope containing the official bill from the local taxing authority. Whether we like it or not, property taxes seem to increase every year and with it, the economic burden of paying them.

Problem is, many of us do not see our incomes rise every year with such dramatic regularity as the county property tax tables. For retired folks living on a fixed income, the continual upward momentum of tax rate can be a definite burden. To hold onto one’s property, sacrifices have to be made, including cutting back on food, travel, and other luxuries.

Homeownership in America is indeed a great concept. But unfortunately, it is just that, an idea. The fact of the matter is once you stop paying your property taxes, it won’t take very long at all for the state to initiate proceedings to take your home. In reality, no one really owns anything. It’s merely on loan to you by the government pursuant to you keeping your tax payments current.

Fortunately, the esteemed legislators of this great state have instituted laws which actually help the home and landowner. As difficult as it is to believe there is any sort of government rule to save people money, such laws do exist. Yes, Virginia, there is an alternative for those who wish to save a few dollars on their property taxes. It’s called: Deferred Collection of Taxes on Residence Homestead of Elderly Person or Disabled Veteran. In legal terms, it’s section 33.06 of the Texas Tax Code. 

It’s easy to get set up, too. All that’s required is that you are over age 65 or disabled and that you fill out and submit the proper forms to your taxing authority (use form 50-126 and form 50-274). You also have to have a homestead exemption (use form 50-114 and form 50-114-a). After everything is filed, a portion of your property taxes is deferred.

Of course, this doesn’t mean that you don’t owe the taxes (insert loud laugh track here). No sir, you never get completely out of paying taxes, remember what old Ben said. It simply means that the requirement for paying them is delayed until you shuffle off this mortal coil or you decide to sell your property.

The only drawback is that some mortgage lenders may see your tax records and view them as being delinquent.  Be sure to check with your lender first to see if they recognize Texas property tax deferment from the get-go. You may have to remind your lender with yearly mailings showing receipts for the taxes that you paid and that your documents are on file with the state.

Refinancing your mortgage from a deferment friendly lender to a new entity can also cause problems. More often than not, the refi lender that you begin with resells your loan to a third party. If this third-party loan company operates out of California (or states where a lender is not aware of the program), there’s a good chance they will inquire as to why taxes have not been paid.

Despite the possible issues, Texas property tax deferment is a viable option when it comes to reducing the amount of property tax that you pay out every year. Talk to your current loan company and get the forms from your Texas taxing authority. Age 65 property tax deferment is simple to get started and a no-brainer when it comes to choosing options to save money.

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