What is tax-freeze portability?

In 1997, the state legislature and citizens of Texas voted to change the state's constitution to allow eligible senior citizens to transfer their school tax-freeze benefit when selling their home and moving into another home. Effective Jan. 1, 1997, Texans 65 years of age or older who own a home and have their property school taxes frozen can transfer that tax-freeze benefit with them when purchasing and moving into another home in Texas. This transfer is referred to as property-tax-freeze portability. State Sen. David Cain, sponsored and passed this legislation to ensure that senior citizens living on a fixed income could move without losing their property-tax-freeze benefit.

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. Previously, seniors could keep their $10,000 homestead exemption but could not transfer their school tax freeze to a newly purchased home. This prohibited many seniors living on fixed incomes from moving to another home. In some instances, even a move to a smaller, more efficient home would cost seniors more because of the increase in school taxes they would incur due to losing the tax freeze. Under the old law, if you had your tax freeze in place for ten years and decided to move, your new school taxes were calculated based on current tax rates and appraisals, which resulted in tremendous increases in the taxes you paid no matter where you lived in Texas.

How does portability work?

Your school tax-freeze portability is calculated in the following way: Your county tax appraisal district uses your current home's tax appraisal value and your current frozen school taxes to calculate a ratio. That ratio is applied to the appraised value of your new home to determine the school tax rate on that home. This new tax rate is frozen for as long as you live in that home. The formula is designed to keep your new tax freeze in proportion with your old tax freeze so you don't experience a huge increase in school taxes when you move.

If you're 65 or older and currently have a tax freeze in place and are looking to purchase another home to move into, you can contact your county tax appraisal district to assist you. They can help you use the tax-freeze formula to calculate what your property taxes would be at your new home. You can take your school tax freeze with you even if you're moving into a new county. All county tax appraisal districts should be capable of calculating your tax freeze portability using your current home tax status and your prospective new home property-tax appraisal.

You should contact your county tax appraisal district for more information on this important benefit for senior citizen homeowners.