Property Tax Exemptions

Homestead Exemptions a Tax Loophole

Appraisal district processing relies mostly
on homeowners statements, not scrutiny

Investigative Report by Ken Martin
Part 2 of a series
Data Research by Brandon Roberts
© The Austin Bulldog 2014
Posted Thursday February 27, 2014 7:52pm

Two hundred eighty eight thousand dollars.

And counting.

That’s how much homeowners have been charged for back taxes so far as a result of The Austin Bulldog’s investigation of improperly granted residence homestead exemptions.

As important as it is to collect these back taxes, in the long run it may be more important to staunch the bleeding of tax dollars that would’ve gone on unabated had it not been for this investigation.

This investigation has spurred numerous actions by the Travis Central Appraisal District to validate existing homestead exemptions, but numerous significant barriers exist that prevent more effective screening of new applications. (More about that later.)

Homestead residence exemptions lower the taxable value of a home. (The amount of exemptions granted by local taxing entities were published in Part 1 of this series on December 20.) When improperly granted, these exemptions cause the homeowner to be under-billed for property taxes.

Texas law entitles homeowners to have a residence homestead exemption on only one home per tax year. The exemption is authorized for the home that is the owner’s primary residence on January 1.

Although nearly $300,000 has so far been billed for back taxes owed by homeowners who have managed to obtain more than one exemption, correcting the mistakes exposed by this investigation is very much still a work in progress for the Travis Central Appraisal District and Travis County Tax Collector’s office.

As reported by The Austin Bulldog December 20, 2013, several hundred homeowners have obtained homestead tax exemptions on more than one residence—and thus avoided paying the full amount of property taxes that would otherwise be due.

Some 165 of these property owners had more than one home located in Travis County that enjoyed a tax exemption. Additional taxes billed to these homeowners as a result of this investigation totals $143,716 to date. (For details, click on: Homeowners Who May Have an Improper Residence Tax Exemption in Travis County.) As indicated by the questions inserted in “Remarks” (Column Z of this database), not all of these improper exemptions have been removed. Even in those cases where improper exemptions have been removed, it appears that not every homeowner was billed for the correct number of years for back taxes.

Another 120 homeowners dodged taxes by obtaining exemptions in both Travis County and another Texas county. (For details, click on: Homeowners Who Had an Improper Residence Homestead Exemption in Travis County or Another County.) The Travis Central Appraisal District eventually removed the inappropriate exemptions and initiated billing for back taxes totaling $144,367 for these properties.

Appraisal District corrective action

Homestead Exemptions Rife With Abuse

Honor system applications and inadequate scrutiny
for hundreds of homeowners not billed for full taxes

Investigative Report by Ken Martin
Part 1 of a series
Data Research by Brandon Roberts
© The Austin Bulldog 2013
Posted Friday, December 20, 20135:48am

Pablo Ornelas Jr. is being hit this month with a sudden increase in property taxes totaling more than $18,000 that he must pay by January 31 or face stiff penalties and steep interest charges.

Still, it’s hard to complain when he enjoyed an improper tax break for 15 years on one of the homes he owns.

For Ornelas, it’s actually good news that the law restricts the collection of back taxes to just five of those 15 years (2008-2012).

While that adds up to a lot of money, he will not have to repay the additional $21,000 in taxes he was under-billed for in tax years 1998 through 2007, according to calculations provided by Renea Deckard, associate deputy for collections in the Travis County Tax Office.

The bottom line is that a single oversight by the Appraisal District has so far cost taxing entities some $39,000 in revenue that was due on a single house. As stated above, Ornelas is being billed for only $18,000 (46 percent) of that amount.

If not for this investigation—which triggered the Appraisal District’s action to initiate collection of back taxes from Ornelas, and upped the taxes for 2013 as well—this hemorrhage would have continued for the foreseeable future.

Not an isolated case