2021-033 Disabled or Over 65 Property Tax FreezeDate: May 28, 2021 Report No. 2021-033
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
The purpose of this Informal Staff report is to provide a response to a Councilmember’s request
for a summary of the options available to repeal the 65 years of age or older property tax freeze
and increase the homestead exemption for City of Denton property owners.
BACKGROUND:
In 2017, City of Denton voters approved a property tax freeze for property owners who are disabled
or 65 years of age or older. The freeze only applies to homestead properties and is administered
and approved by the Denton Central Appraisal (DCAD) each year as part of the appraisal process.
The freeze establishes a tax ceiling for qualified property owners. The ceiling represents the
maximum amount a qualified property owner will pay in City taxes annually, ultimately protecting
the homeowner from an increase in their property tax bill. For example, if a property owner
qualifies for the exemption in 2020, their tax ceiling moving forward will be equal to the 2020 tax
amount. Currently, the City has approximately 7,872 properties with the freeze which represents
$1.58 billion in taxable value. Since eligible homeowners pay a frozen amount, the loss of taxable
value represents a loss of revenue to the City in the following annual amounts:
In addition to the disabled or over 65 property tax freeze, qualifying homeowners over 65 years of
age or with a disability can apply for a homestead exemption equal to $50,000. The City also has
a homestead exemption that equals 0.5% of the taxable value or a $5,000 minimum, whichever is
greater. There are currently 20,226 properties in the City with a homestead exemption. Similar to
the other exemptions, these exemptions are administered and approved by the DCAD. It is
important to note that the City’s portion of an average total tax bill represents approximately 26%.
The following sections summarize the option for City Council to repeal the over 65 tax freeze and
an alternative option for increasing the homestead exemption.
APPEAL TO THE STATE LEGISLATURE
Once a city adopts the over 65 tax freeze, it may not be repealed or rescinded. Texas Constitution
Article VIII, section 1-b(h). In order for the City to repeal the exemption, the Texas Constitution
would need to be amended to allow cities to repeal the exemption. The Texas Constitution is
amended by a joint resolution being approved by a 2/3 vote of the entire membership of each house
of the Texas Legislature and subsequently approved by the voters at a duly called election. If
approved, additional legislation may be required to enact the change.
Fiscal Year*Accounts Projected Loss in Revenue Tax Rate Loss of Value
2020 7,486 $968,872 $0.590450 $1,420,000,000
2021 7,872 $980,178 $0.590450 $1,580,000,000
* FY 2019 was the first year of the over 65/Disabled tax limitation (freeze)
City of Denton Disabled or Over 65 Freeze Summary
Date: May 28, 2021 Report No. 2021-033
INCREASING THE HOMESTEAD EXEMPTION
The City’s homestead exemption allows homeowners living in their principal residence a reduction
in assessed value used to calculate City of Denton property taxes. The City’s current homestead
exemption rate is 0.5% or a minimum or $5,000 whichever is greater. Currently, the City has
approximately 20,226 homes with this exemption, representing 63% of all single-family homes in
Denton. According to the DCAD website, a homeowner may file for a homestead exemption
between January 1 and April 30 for the year for which the exemption is requested. The City
Council may increase the homestead exemption to 20% of a property’s appraised value. A change
to the homestead exemption rate in the future would have an impact to both homes receiving the
exemption and to the City in lost revenue from exempted values. To maintain the same level of
property tax revenue, an increase in offered exemptions would require an increase in the property
tax rate. The deadline for City Council to make a change to the homestead exemption is July 1. If
City Council desires to pursue this option, staff will present the full financial impacts of any change
for Council consideration.
STAFF CONTACT:
Cassey Ogden
Finance Director
Cassandra.ogden@cityofdenton.com
REQUESTER:
Council Member Armintor
PARTICIPATING DEPARTMENTS:
Finance
STAFF TIME TO COMPLETE REPORT:
Two hours