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 What is "HS Cap"?

Solution

HS Cap is short for Homestead Cap.

Cap value applies to residential homesteads only and it goes into effect the second year after a residential homestead exemption has been granted for your residence. If the property is your residence homestead, the appraised value may not exceed the lesser of the market value of the property or the sum of:

  • 10 percent of the appraised value of the property for the preceding tax year;
  • the appraised value of the property for the preceding year; and
  • the market value of all new improvements to the property.

Example:

A property with a Homestead Exemption is appraised for $100,000 in 2015.  The owner doesn't make any significant changes to their property, but multiple external factors contribute to a rapid property value increase; the district determines that the property's 2016 appraised value is $125,000 — a 25% increase in value.

Since the property's owner has a Homestead Exemption on the property, the property's assessed value is "capped" at 10%.  So, even though the district has set the property's appraised value at $125,000, the property's owner would only be responsible for the tax liability that corresponds to a $110,000 value assessment.

2015 Appraised Value 2016 Appraised Value 2016 Assessed Value Homestead Cap Loss
$100,000 $125,000 $110,000 $15,000

HS Cap Loss is short for Homestead Cap Loss.

The Homestead Cap Loss represents the difference, in dollars, between a property’s appraised market value and its assessed value when the difference is caused by a Homestead Cap.

 
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