If you file for bankruptcy in Texas, you can exempt the entire value of your home -- this is called the homestead exemption. However, there are some acreage limits to the Texas homestead exemption. Read on to find out more about the homestead exemption in Texas.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see our Bankruptcy Exemptions area.
The Texas Homestead Exemption Amount
Under the Texas state exemption system, homeowners may exempt an unlimited amount of their home or other property covered by the homestead exemption.
However, the Texas state exemption system does have acreage limitations which are based on the location of the property. For urban homesteads located in a city, town, or village, the property cannot exceed ten acres. For rural homesteads located anywhere else, the property cannot exceed 100 acres, unless the rural homestead is occupied by a family, in which case it cannot exceed 200 acres.
The Scope of the Texas Homestead Exemption
In Texas the homestead exemption applies to real property serving as your primary residence, such as your home or condominium. Texas considers any improvements (including a swimming pool, barn, water tower, pumps, roads, and other substantially affixed items) to your primary residence as part of the homestead exemption. Texas laws also provide an unlimited homestead exemption for your burial plot.
In Texas, temporarily renting out a home does not change its homestead character if you have not acquired another homestead.
Can You Use the Federal Bankruptcy Exemptions in Texas?
In Texas you can use either the state exemption system or the federal bankruptcy exemption system (but you can’t pick and choose different exemptions from each system – you have to use all state exemptions or all federal exemptions.)
The federal bankruptcy homestead exemption amount is $21,625. The exemption may be used for homes, condos, co-ops, mobile homes, and burial plots. Married couples may double this exemption. You can find the federal bankruptcy homestead exemption at 11 U.S.C. §522(d)(1) and (5).
(To learn more about which state exemptions apply to you, see Which Exemptions Can You Use in Bankruptcy?)
In Texas, you must file a homestead declaration, (a form filed with the county recorder’s office to put on record your right to a homestead exemption) before ou file for bankruptcy in order to claim the homestead exemption. In Texas, this form is called an “Application for Residence Homestead Exemption” and is known as Property Tax Form 50-114. Contact your appraisal district for information on how to file a homestead declaration. You can also find this form at the Texas Window on State Government website at www.window.state.tx.us/taxinfo/taxforms/02-form06.html.
If you fail to file a homestead declaration in Texas, the court will do it for you and charge you for the fees and expenses.
Finding the Texas Homestead Exemption Statute
Texas’s homestead exemption is found in Chapter 41 of the Texas Property Code at §§ 41.001 – 41.024. To learn how to find state statutes, check out Nolo’s Laws and Legal Research area.
Texas provides all of its current laws at www.statutes.legis.state.tx.us.
Periodic Adjustments of Federal Bankruptcy Exemption Amounts
The federal exemption amounts are adjusted for inflation on April 1, every three years. They were last adjusted in April 2010 and will thus be adjusted again on April 1, 2013.