Continuation of Residence Homestead Exemption

How it works

Tax Code Section 11.135 allows a property owner to continue receiving the homestead exemption on the structure, land, and improvements when the residential structure is rendered uninhabitable or unusable by a casualty or by wind or water damage while the owner constructs a replacement structure on the land.

What the money covers

This preserves the existing homestead exemption during reconstruction. It is not a direct payment for repairs.

Timing and deadlines

• Active construction or other physical preparation must begin no later than one year after the owner stops occupying the former residential structure.
• If the property is in a governor-declared disaster area and is uninhabitable or unstable because of the disaster, active construction or site preparation must begin no later than five years after the owner stops occupying the principal residence.
• The owner must notify the appraisal office within 30 days after the date eligibility for continuation ends.
• The continuation cannot last more than two years, or more than five years in a governor-declared disaster area.

Key restrictions

• The owner may not establish a different principal residence for which they receive a homestead exemption during the continuation period.
• The owner must intend to return and occupy the structure as the principal residence.
• If the owner sells the property before completing the replacement qualified structure, additional taxes and interest may apply.

Related tax treatment

The page also notes that a replacement structure is not considered a new improvement to the extent needed to satisfy square footage or exterior-quality requirements of a disaster recovery program administered by the General Land Office or by a political subdivision of Texas that is federally funded.