Texas Homestead Exemption Strategies

One of the most powerful — yet often misunderstood — asset protection tools in Texas is the homestead exemption. At Guerra Days Law Group, we help homeowners maximize this exemption to protect their primary residence from creditors, judgments, and probate complications. If you own a home in Texas, understanding and properly claiming the homestead exemption could be the difference between keeping your property or losing it during a legal dispute.

What Is the Texas Homestead Exemption?

The Texas homestead exemption is a legal provision under the Texas Constitution and Property Code that protects the value of your primary residence from most creditors. Unlike many other states, Texas offers unlimited value protection — meaning your entire home’s equity can be shielded, regardless of market value.

However, there are acreage limitations:

Urban homesteads: Up to 10 acres (contiguous)
Rural homesteads: Up to 100 acres for a single person or 200 acres for a family

These limits refer to the land, not the value of the home. That’s what makes Texas one of the most homestead-friendly states in the country.

Who Can Claim the Homestead Exemption?

To claim the Texas homestead exemption, you must:

Own the property (your name is on the deed)
Occupy the home as your primary residence
Intend to make it your permanent home

You can only claim one homestead at a time. If you move, you must update your designation with the county appraisal district to protect your new home.

What Does the Homestead Exemption Protect You From?

Once your homestead is properly declared, Texas law protects it from:

General creditors (like credit cards or personal loans)
Lawsuit judgments
Business liabilities (if your personal residence is targeted)
Bankruptcy (under certain federal rules)

Important: The homestead exemption does not protect against:

Federal tax liens (e.g., IRS debts)
Mortgages and home equity loans
Property taxes
Mechanic’s liens for work done on the property
HOA liens (in some cases)

Why Homestead Protection Is an Asset Protection Tool

The homestead exemption is more than just a property tax discount — it’s a critical legal shield that can protect a family’s most valuable asset from financial disaster. We work with clients to:

Confirm the homestead is properly recorded and declared
Ensure title issues or trusts do not disqualify the exemption
Structure home ownership through estate plans that preserve the exemption after death
Avoid actions that might waive or undermine the exemption, such as moving out or renting the property

Common Mistakes That Undermine Homestead Protection

Here are some real-world problems we’ve seen that could have been avoided with proper legal planning:

Failing to file a homestead designation: Even though constitutional protection is automatic in many cases, failing to file with the appraisal district can lead to unnecessary confusion and missed tax savings.
Placing the home in a business entity: LLCs and corporations don’t qualify for the homestead exemption. Putting your home into one of these entities can strip away protection.
Renting out the entire property: If you move out and rent the property to others, the homestead protection may lapse.
Estate plans that transfer title: Poorly drafted wills or revocable trusts can inadvertently trigger loss of the exemption or probate fights.

Should You Place Your Homestead in a Trust?

Many Texans ask us whether their home can be held in a trust and still qualify for the homestead exemption. The answer is: yes, but only if it’s structured correctly.

If you place your home in a properly drafted grantor trust (where you retain control), and you continue to occupy the residence as your primary home, you can typically maintain the homestead protections. But careless or boilerplate trusts may lead to disqualification — especially when ownership is transferred without specific legal language required by Texas law.

Homestead Protection in Bankruptcy

Under federal bankruptcy law, Texas residents can elect to use the state homestead exemption, which often provides superior protection compared to the federal exemption. However, there are some caveats:

If the property was acquired within 1,215 days (approx. 3.3 years) of the bankruptcy filing, a cap of approximately $189,050 (subject to inflation) may apply under federal law
Improper transfers or attempts to defraud creditors may lead to clawbacks or exemption denial

It’s critical to get qualified legal advice if you are contemplating bankruptcy and rely on the homestead exemption for protection.

Homestead Planning After Death

Texas also protects surviving spouses and minor children through a probate homestead allowance. This allows them to remain in the home even if other creditors have claims against the estate. But disputes can arise when:

There is no valid will
Multiple heirs claim an interest
One child lives in the home while others demand a sale

We help families navigate these issues through careful deed planning, testamentary trusts, and survivorship clauses.

Work With Guerra Days Law Group to Secure Your Home

Our attorneys work with homeowners across Texas to ensure their homesteads are fully protected under the law. Whether you’re purchasing your first home, creating a living trust, or planning for retirement, we’ll help you make the right moves to keep your home secure from outside threats.

Explore More Asset Protection Strategies

This page is part of our full Asset Protection Guide. Explore other powerful legal tools:

Protect Your Primary Residence Today

Don’t leave your home exposed. Schedule a consultation with Guerra Days Law Group and let us help you build a wall around your most valuable asset — legally and effectively.

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