Photo by Enrique Macias on Unsplash

Question:

I have a house in Texase that I bought in 2001 and paid off in 2009 when I was not married. I got married in 2014 and my husband moved with me. In October 2023, his mother died. My husband’s sister had put a reverse mortgage in their mother’s house to pay for her care at a nursing home. My husband was willed the house. Therefore, we had to pay the reverse mortgage. We moved from my house and live in my mother-in-law’s house now. We tried to do the homestead exception on his house, but they say they would remove my homestead exception from my house because we are married, even if his house is only under his name and mine is only under my name. I want to know if I can put my house in a trust for our two small children (they will be 8 and 7 this year)? Is that going to reduce the property taxes paid on the house that will lose the exemption since the house won’t be under my name anymore? I am just trying to see how to reduce the taxes.

Response:

I’m sorry but I can’t answer your question because it has to do with local real estate tax laws, but my guess is you’re out of luck. Usually, states and municipalities provide for homestead reductions in real estate taxes with the goal of helping people stay in their homes. Since you’re not living in the house any longer, you’re likely to lose the exemption whether or not you transfer your former into trust.

But if you begin to rent out the property, you will be able to take advantage of other income tax benefits. You will be able to deduct the costs of maintaining the property, including the real estate taxes, from the rental income. And you will be able to depreciate the property, taking a further deduction on your taxes. The tax code is designed in many ways to favor real estate investors.

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