What is the 10 percent homestead cap in Texas?

Once a Texas home has a homestead exemption, the appraisal district cannot raise its net appraised value more than 10 percent per year, no matter how much the market moves. The cap does not transfer to a buyer. It resets to market value after a sale, which is why a new owner's tax bill often jumps.

What the cap actually limits

The cap is 10% per year on net appraised value, and it applies to properties that already have a homestead exemption in place (Texas Comptroller).

It does not cap your tax bill. It does not cap the tax rate. It caps the growth of the value the taxing units are allowed to tax. Rates are still set every year by each taxing unit's own board, and a rate increase raises a bill with a fully capped value.

It also does not cap the district's market value conclusion. The district still appraises the home at what it believes the home is worth. The cap sits on top of that and limits what gets taxed.

Read your notice: there are two values on it

This is the part that confuses people every spring. A notice of appraised value on a homesteaded property shows a market value and an appraised (capped) value, and after a few years of appreciation they are not close.

Market value is the district's opinion of what the property would sell for. Appraised value is the capped figure. Taxable value is that capped figure minus your exemptions. The bill is built off taxable value.

Two consequences follow:

A homeowner whose capped value is far below market value may have little to gain from a protest that only argues market value down a little. The number that matters is whether the capped value is correct, and whether the market value has been driven low enough to actually pull the capped value with it.
The gap between the two is stored-up increase. It does not vanish. It waits.

The cap turns on when the exemption does

There is no cap without a homestead exemption. A property with no exemption on file has no cap, and the district can move its value to market in a single year.

The exemption requires that the owner owned and occupied the home as a principal residence on January 1 of the tax year, and applications are due before May 1 (Texas Comptroller). In Boerne and anywhere else in Kendall County, that filing goes to the Kendall Appraisal District (kendallad.org), not Bexar CAD — Boerne is in Kendall County, not Bexar County, and not in the City of San Antonio.

So the practical sequence is: buy, qualify on a January 1, file the exemption, and the cap begins protecting you going forward. It does not reach backward and it does not apply in the interim.

The reset: what happens when the house sells

The cap belongs to the property under a qualifying owner's exemption. It does not travel with the sale.

When a homesteaded property sells, the protection that built up over the seller's years of ownership ends. The new owner faces the district's market value — frequently informed by the price just paid — and must establish their own exemption and their own cap from that new baseline.

The practical version, and it is the most common tax surprise in Texas residential real estate:

The seller's tax bill is not a forecast of the buyer's tax bill. A seller who owned a Hill Country home through a run of appreciation might be paying on a capped value well below market. The listing shows that number. The county website shows that number. It is a record of what somebody else paid under their own exemption and their own cap, and it is not what the buyer will pay.

When taxes are escrowed, the correction shows up as a lender escrow analysis and a monthly payment increase, well after closing and long after the buyer stopped thinking about it. The number to budget from is an estimate built on the purchase price, the current adopted rates for the actual taxing units on that parcel, and the exemptions the buyer will personally qualify for — not the seller's bill.

For scale on the rates involved, Boerne ISD adopted 1.0109 per $100 of taxable value for 2025, after 0.9909 in 2024 (Kendall County).

What the cap survives, and what it does not

The cap follows a qualifying owner's homestead on the property. Events that change ownership, occupancy or exemption status can end it — a sale, a move, a transfer into a trust or an entity, a change in who holds title after a death.

New improvements are treated separately. Added value from new construction — square footage, a casita, a shop, a pool — is generally taxed, rather than being absorbed under the cap. Ordinary repairs and maintenance are a different category. Where a specific project falls is a determination the appraisal district makes, and the time to ask is before the permit, not after the notice arrives.

Whether a specific transfer preserves or ends a homestead exemption and its cap is a legal and administrative question. The appraisal district decides exemption status; a Texas real estate attorney is the right person to look at the deed or trust before it is signed.

Investors: the 10% cap is not yours, and the one that is expires

Non-homestead property gets no 10% cap. Rentals, second homes, land held for investment — the district can move those to market value in one year.

There has been a temporary substitute. Under Tax Code §23.231, a 20% circuit breaker limits annual appraised value increases on qualifying non-homestead real property valued at or below a threshold. The threshold is indexed annually, and published figures for the current year do not agree with each other — confirm the number with your appraisal district rather than a blog.

The important part is the calendar. The circuit breaker was created by SB 2 (2023) as a pilot covering tax years 2024, 2025 and 2026, and it expires after the 2026 tax year unless the Legislature renews it. There is no application; the appraisal district applies it automatically, and the owner must have held the property for at least one full calendar year to qualify (Travis Central Appraisal District).

It also excludes land under agricultural-use special appraisal and homesteads already covered by the 10% cap.

Anyone underwriting a Texas rental or a piece of investment land past 2026 should run the numbers both ways: with the circuit breaker and without it. Its expiration is on the books, not speculative, and a proforma that quietly assumes a 20% ceiling in 2027 is assuming a law that currently sunsets.

When the cap is the reason a protest is worth filing anyway

If the district's market value is materially wrong — wrong square footage, unrecorded condition problems, a comparison set that does not reflect your street — it is worth correcting even in a year when the capped value governs your bill. Market value feeds forward. A market value left too high keeps the capped value climbing 10% a year for as long as the gap lasts.

The protest deadline is May 15, or 30 days after the district mails the notice of appraised value, whichever is later (Texas Comptroller).

Value determinations, exemption status and cap calculations are all made by the appraisal district. Take the tax consequences of a purchase, sale or ownership change to a CPA.

Questions about a specific property?

Call or text 830-446-3847 · Email heath.shepard@kw.com

This page explains how the Texas homestead appraisal cap works. It is not tax or legal advice. Appraised value, exemption status and cap calculations are determined by your appraisal district; tax consequences should go to a CPA.