San Antonio Express-News
January 10, 2006

Property Tax Deferral

copyright 2006, Paul Premack

Texas law allows homeowners who are 65+ or who are disabled to delay paying property taxes to a later date. This is called a tax deferral and is granted by filing "Form 33.06" with the Appraisal District.

Generally, deferring taxes should be considered a last resort, to be used if you have no other financial choice. While there are no penalties during the deferral, interest does accrue at 8%. If your mother has adequate resources, it may save money if she eliminates the deferral and pays the taxes now. That removes the interest expense and simplifies the tasks that lie ahead for the heirs.

Deferring taxes does not eliminate the taxes; they must be paid when the house is sold or after the owner dies. If they are not paid, the taxing authority can bring suit for collection after a required six-month grace period. If your mother does not pay off the taxes now, then when she dies her Executor will be required to pay them as part of settling her estate. The money does not come directly out of the heirs’ pockets, but when the taxes get paid there are fewer dollars left to go into their pockets.

Dear Mr. Premack: My grandfather received 49 acres through a lawsuit back in 1940's or 50's. He was married with children, but the land was placed under his name only. Since they were married, should they each have legal rights to half the acreage? Does the survivor get the other half when one of the dies? Or does my grandmother only get an interest when grandfather dies if there is no will? – OG

Provisions in the Texas Family Code dictate that any asset acquired during a marriage is community property unless it is 1) inherited, 2) received as a gift, or 3) is a recovery for personal injury. Those categories create separate property, which also includes any items owned by a person before the date the marriage began.

If, for instance, 1) there is a deed showing your grandfather claimed ownership before the marriage date and that the lawsuit only defeated someone else’s claim to the acreage, or 2) the lawsuit was for a personal injury to him, then the land would be his separate property. In the absence of clear evidence categorizing the land as separate property, the land is presumed to be community property.

Assuming it is community property, then your grandmother would own a 50% share even though the deed was put into your grandfather’s name only. However, she would not be allowed to manage the land as it falls into a legal category called sole-management community property. If it is sold, she is entitle to half the proceeds.

If they make Wills, they can devise their halves to anyone they want. They are not required to leave the land to each other. If they fail to make Wills, then state law directs ownership to the survivor between them, even though the survivor has to go through a potentially complex legal proceeding to establish that ownership.