Texas Homestead Exemption: How It Protects Your Home

What is protected

The Texas Constitution and Property Code protect a homestead from judgment creditors, so an unsecured creditor generally cannot force a sale of your home even if the judgment is large. There is no dollar cap on value, which makes the Texas homestead one of the strongest in the country. Urban homesteads can include up to 10 acres with improvements, and rural homesteads up to 100 acres for a single adult or 200 acres for a family. Added acreage may be protected separately in some cases, so check with an attorney.

The exceptions

• Purchase money liens for the original purchase.
• Property taxes.
• Home equity loans that follow the constitution's requirements.
• Owelty liens from a division of property in divorce or between co-owners.
• Improvement liens that meet written contract and waiting requirements.
• Reverse mortgages that meet statutory conditions.
• A few other statutory liens, such as certain owner association and tax-related liens, depending on the law.

Use and intent

A homestead is created by use plus intent. You must live in the property and mean to treat it as your home. A second home, a rental or property you do not live in is generally not a homestead. If you abandon the property and move out for good, the protection can end. Temporary absence for work or health, with intent to return, usually does not.

The tax exemption is separate

The school and local property tax homestead exemption, and the tax ceiling for owners 65 or older or disabled, are separate benefits administered by your appraisal district. Filing for the tax exemption helps document your homestead, but the constitutional protection applies whether or not you file. See homestead and living trusts.

Mistakes to avoid

• Transferring your home to an LLC, which cannot hold a homestead.
• Borrowing against it outside the constitution's home equity rules, which can make the lien invalid.
• Assuming it protects against everything. A mortgage lender or taxing authority can still foreclose.
• Moving in a large amount of nonexempt cash to pay down a mortgage right before a claim, which can raise fraudulent transfer issues. See fraudulent transfer law.

Frequently asked questions

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