What is tax-freeze portability?

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At age 65, a homeowner receives an additional $10,000 homestead exemption and a tax freeze on the amount of school taxes they pay for as long as they own the home (provided improvements are limited to normal repairs and maintenance). Should the senior citizen purchase a new homestead in Texas, he may apply to proportionally transfer the school-tax-freeze benefit to his new home. This transfer is referred to as tax-freeze portability and is designed to keep senior citizens from experiencing huge increases in school taxes upon moving.

The tax freeze for school taxes on a new homestead following such transfer is determined by calculating the percentage of school taxes that are frozen on the current homestead and applying that percentage to the school taxes of the new home. For instance, if the homeowner pays $100 in school taxes for the current homestead, but would have to pay $400 without the tax freeze, the percentage of school taxes paid is 25%. If the school taxes on the new home would normally be $800 in the first year, tax-freeze portability results in school taxes of $200 (or 25% of $800) on that home.

Source: TAR

 

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