New Texas Law Designed To Curb Improper Real Property Tax Benefits On Fraudulent Homestead Claims Trips Up Half Of All Recent Applicants

In Houston, Texas, the Houston Chronicle reports:

• If you’re one of the roughly 125,000 people applying for a homestead exemption on your property taxes this year, there’s a good chance you goofed up the application and will need to submit your form again.
  
  
• A new state law has led to about half of all new homestead exemption applications being denied since the law took effect last September, Harris County Appraisal District chief appraiser Jim Robinson said.
  
  
• Harris County homeowners claim about 800,000 such exemptions, which give homeowners up to a 20 percent discount on their property taxes at their primary residence. Those over 65, disabled veterans and others also can claim exemptions.
  
  
• The new rules are intended to prevent fraudulent exemption claims, the most common of which typically entail a Houstonian claiming an exemption here and then also claiming one on a lake house elsewhere in the state, Robinson said.

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• Though the new rules are a hassle and have run up his postage budget as so many applicants need to be notified of the errors on their forms, Robinson said the new law has put a “dramatic dent” in fraudulent exemption claims.
  
  
• “When that occurs, you might as well go into one of the school districts and steal that much money,” he said. “In essence that’s what you’re doing. It was a significant problem. We at times have found people that had as many as 20 homestead exemptions in Harris County.”
  
  
• HCAD normally finds about 15,000 duplicate homestead exemption claims each year, Robinson said, and is then required to cancel one of the duplicates and assess the full tax bill dating back five years. That civil penalty alone is fairly stiff, he said, but criminal charges also can follow.
  
  
• “In some cases if the District Attorney feels it’s egregious they will do a felony tampering with a government record charge,” he said. “The civil penalty itself when you go back for five years is pretty tremendous.”
  
  
• If you pull up a homestead exemption form and notice the deadline is listed as April 30, don’t panic. In reality, Robinson said, the deadline is immediately before a given year’s taxes become delinquent. For instance, property owners needing to claim homestead exemptions for the 2011 tax year can do so until Jan. 31, 2013.
  
  
• If you have a mortgage and you delay that long in claiming the exemption, however, your bank likely will pay your tax bill at the higher amount, Robinson said, and that could lead to a hassle when you’re arranging to get that money back later.

For the story, see Homeowners struggle with new homestead exemption rules.