How Does Property Tax Deferral Work for Texas Seniors?

Yes, Texas seniors can defer property taxes. Under Texas Tax Code Section 33.06, a homeowner who is 65 or older, or disabled, can postpone paying property taxes on their residence homestead for as long as they own it and live in it. The taxes are not forgiven. They build up with interest at 5% a year and are paid when the home stops being your homestead, usually when it sells or passes to heirs.

This surprises people more than it should. Plenty of longtime homeowners in The Woodlands and across Houston have heard of the over-65 exemption and the tax ceiling, and never heard there is a third tool sitting next to them.

Deferral vs. Exemption vs. the Tax Ceiling

These three get mixed up, so here is the short version:

Tool	What it does
Over-65 or disability exemption	Removes part of your home’s value from the taxable amount. The school district portion is now $200,000 combined for seniors, per our look at what the 2026 homestead exemption saves.
Tax ceiling	Caps your school taxes at the amount from the year you qualified, as long as you do not add major improvements.
Deferral	Lets you stop paying the remaining bill now and pay it, plus interest, later.

The exemption and ceiling lower the bill. The deferral postpones whatever bill is left. Most people who use a deferral already have the first two.

How the Deferral Actually Works

You file the Comptroller’s Form 50-126, the Tax Deferral Affidavit for 65 or Older or Disabled Homeowner, with the appraisal district in the county where the house sits. In Harris County that is HCAD, and in Montgomery County it is MCAD. The form has to be notarized.

Once it is on file:

• Taxing units cannot sue to collect the deferred taxes while you own and live in the home.
• Interest accrues at 5% a year, and the regular delinquency penalties do not apply.
• The tax lien stays on the property the whole time.
• You can file even if the taxes are already past due.

A surviving spouse may be able to keep an existing deferral going. The same form covers that case, so check it with the appraisal district.

What Happens When You Sell

This is the part that matters for a move. The deferral ends when the home is no longer your homestead. When you sell, the title company orders a tax certificate, and the deferred taxes plus interest come out of your proceeds at closing, just like the mortgage payoff. After the deferral ends, regular penalties and interest start, so a long gap between moving out and closing costs real money.

That is why we ask sellers early whether a deferral is on the house. A surprise payoff line on the settlement statement is a bad day for everyone. Our breakdown of what sellers pay at closing in Houston and how property taxes get prorated at a Texas closing show where that line sits.

If heirs inherit the home, the deferred taxes come due too. Whoever handles the estate should know the deferral exists before deciding whether to keep or sell.

Is It Worth Using?

It can be, if your income is fixed and the home is most of what you own. You keep cash in your pocket now and pay from equity later. The tradeoff is that the balance grows every year, which means less equity for a future move or for your heirs.

Two cautions before filing. First, read your deed of trust. Many mortgages require you to keep taxes current, and an escrowed loan may keep paying them anyway, so call your servicer. Second, talk with your family about it. A deferral is a debt against the house, and the people inheriting it deserve to know.

If you are 65 or older and thinking about whether to stay put or sell, we are happy to walk through what your house would net with or without a deferral on it. The Move Live Love TX Team™ is a husband-and-wife real estate team with CB&A, Realtors, serving Houston and the surrounding areas, from Galveston to Conroe.

Frequently Asked Questions

Can seniors defer property taxes in Texas?

Yes. Under Texas Tax Code Section 33.06, a homeowner who is 65 or older, or disabled, can postpone paying property taxes on the home they own and live in as their homestead. The taxes are not forgiven, they are collected later.

How much interest is charged on deferred property taxes in Texas?

Deferred taxes accrue interest at 5% a year under Section 33.06, and the normal delinquency penalties do not apply while the deferral is in place. The tax lien stays on the home the whole time.

How do I apply for a property tax deferral in Texas?

File the Comptroller's Form 50-126, the Tax Deferral Affidavit for 65 or Older or Disabled Homeowner, with your county appraisal district. The form has to be notarized, and you can file it even on taxes that are already past due.

What happens to deferred property taxes when you sell the house?

The deferral ends when the home stops being your homestead, so the deferred taxes plus interest are paid off at closing out of the sale proceeds, the same way a mortgage payoff is. Ask for a tax certificate early so the number on your settlement statement is right.

Does a property tax deferral affect my mortgage?

It can. Many deeds of trust require you to keep property taxes current, and an escrowed loan may pay the taxes anyway. Read your loan documents and call your servicer before you file, so the deferral does not create a problem with your lender.