New Texas Homestead Exemption Value Cap

After enduring 225 years, a new bankruptcy law (Federal Abuse Prevention Act) recently overturned well settled Texas real estate law and established a limitation upon the values provided by the Texas homestead exemption statutes. Both the State Constitution and the Texas Homestead Exemption Act expressly authorize state residents to claim 10 contiguous urban acres, or 100 contiguous rural acres for a single person, or 200 contiguous rural acres for a married couple, without regard to value of included real estate interests. In addition to surface rights, buildings, improvements, wells, mineral rights, water rights, and permanently affixed equipment may be included.

The new bankruptcy law established a federal value cap, effective as of April 25, 2005, restricting Texas homestead exemptions to a maximum value of $125,000.