Do 100% Disabled Veterans Pay Property Taxes in Texas?

The short answer: usually not on their home. If the VA pays you 100% disability compensation for a service-connected disability and rates you 100% disabled or individually unemployable, Texas Tax Code Section 11.131 exempts the total appraised value of your residence homestead. You still owe tax on any other property, and you have to apply with your county appraisal district.

I served in the Air Force Security Forces from 2013 to 2017, and for four years I've helped veterans buy homes across Collin County as a mortgage broker. 100% rated vets ask me this first, because in North Texas taxes are a big part of the payment.

Who qualifies for the 100% disabled veteran exemption in Texas?

You need two things from the VA: 100% disability compensation for a service-connected disability, and a rating of either 100% disabled or individual unemployability (IU). Either rating works as long as the VA pays you at the 100% rate.

The home has to be your residence homestead, meaning you own it and live in it. Because the exemption covers the total appraised value, there's generally nothing left on that home to tax. It doesn't cover a rental or second home, and insurance and HOA dues still apply.

How do I apply for the exemption in Collin County?

File Form 50-114, the Residence Homestead Exemption Application, with your county appraisal district. In Collin County that's Collin Central Appraisal District, and you can file through their online forms portal or on paper. Denton and Dallas County homes use the same state form with their own district.

• Attach a copy of your Texas driver's license or state ID showing the home's address. Some active duty waivers apply.
• Attach VA documentation of your rating and compensation. Most vets use the Benefit Summary Letter, which you can download from VA.gov. A DPS disabled veteran license isn't proof of your rating.

Once it's approved, you don't reapply every year, though the district can ask you to confirm you still qualify.

When does the exemption start if I buy a home mid-year?

Right away. Under Tax Code Section 11.42(e), if you qualify after January 1, the exemption applies for the rest of that year. You only owe tax for the days before you qualified, figured on a 365-day basis under Section 26.1125.

At closing, the title company splits the year's taxes between you and the seller. Your exemption isn't on the roll yet, so it looks like a normal bill. After the district approves you, the tax office corrects the bill and refunds any tax already paid on the exempt part. If the seller had this exemption, theirs ends when they sell, so ask your title company how the proration handles that.

The usual deadline is April 30, but disabled veterans can file late up to five years after the taxes' delinquency date (Section 11.439). Texas taxes are delinquent if not paid before February 1 of the next year.

What if my rating is less than 100%?

You can still get a partial exemption under Tax Code Section 11.22, applied to any one property you own in Texas. You file Form 50-135.

You get the full $12,000 if you're 65 or older with at least a 10% rating, totally blind in one or both eyes, or have lost the use of a limb. Every Texas homeowner can also claim the general homestead exemption, which takes $140,000 off the value for school district taxes.

Does my surviving spouse keep the exemption?

Yes, as long as they don't remarry. Under Section 11.131(c), the surviving spouse keeps the full exemption if the home was their homestead when the veteran died and it stays that way. If they move, the new home's exemption is capped at the dollar amount from the last year on the old home. Section 11.133 gives a full homestead exemption to the unremarried surviving spouse of a service member killed in the line of duty.

How does a $0 property tax bill change my mortgage payment?

It can lower your monthly payment a lot, and it lowers your debt-to-income ratio. Most VA loans escrow taxes and insurance. When taxes go to zero, the housing payment used for your DTI drops too, which can mean more home or more breathing room.

Lenders differ on day one. Some qualify you on the full estimated tax until the exemption is on the roll, and others use it with your VA letter. I'll tell you which applies to your loan.

After closing, your servicer must review your escrow at least once a year. If it finds a surplus of $50 or more and you're current, federal rules require a refund within 30 days. Servicers can review sooner, so call and ask once your exemption is approved.

Add the VA funding fee exemption and you save at closing too. See VA loan benefits, VA loans in McKinney, or get a free quote review through Beat My Rate.

As a mortgage broker in McKinney, I shop your VA loan with many lenders, whether you're buying in McKinney, Frisco, Allen or anywhere in DFW.

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