Tax Implications of Owning a Lake House in Kaufman & Henderson Counties

Owning a lake house at Cedar Creek Lake is a lifestyle upgrade — and a tax reality check. Property taxes, homestead rules, and short-term rental taxes can move your real cost of ownership by thousands per year. The trick is knowing what applies in Kaufman vs. Henderson County, and whether your home is a primary residence, second home, or rental.

I’ll walk you through the big pieces in plain English. (And yes: this is general info, not formal tax advice — always confirm with your CPA.)

1) Property Taxes: The Baseline Cost You’ll Feel Every Year

How Texas property taxes work (quickly)

Texas has no state property tax; your bill comes from local taxing entities (county, school district, city, MUD/utility districts, etc.). Your county appraisal district (CAD) sets the appraised value, and the taxing entities apply rates to that value. Kaufman County+1

Kaufman County vs. Henderson County

Both counties are known for relatively high effective property tax rates by U.S. standards. Kaufman County’s effective burden is often cited around ~2% of market value on average, though your actual rate depends on your exact taxing units. Tax Rates+1

What this means for Cedar Creek owners:
The same house value can produce meaningfully different bills depending on:

• which side of the county line you’re on

• which city/ISD your property falls into

• whether the property qualifies as a homestead

We always check the taxing map before you buy so you aren’t surprised later.

2) Homestead Exemptions: Huge If You Live Full-Time

The big 2025 update

Texas increased the school-district homestead exemption to $140,000 for qualifying primary residences, plus larger senior/disabled exemptions and continued tax-freeze protections for seniors. Square Deal Blog+2Ownwell+2

The key rule:

You only get the homestead exemption if the lake house is your primary residence. Second homes and most rentals don’t qualify. Ownwell+1

County-specific filing

• Kaufman CAD and Henderson CAD each administer exemptions. You file with the CAD where the home is located. Kaufman CAD+2henderson-cad.org+2

Full-time owner takeaway:
If Cedar Creek becomes your main home, filing homestead correctly can drop your annual bill materially.

Weekend owner takeaway:
Don’t budget assuming homestead savings. You likely won’t have them.

3) Second Home vs. Rental: Tax Treatment Changes Fast

Second home (mostly personal use)

• You pay property taxes at full taxable value (no homestead).

• Mortgage interest may be deductible within IRS limits (talk to CPA).

• No hotel occupancy tax unless you rent it out.

Short-term rental / vacation rental

Once you rent for stays under 30 days, you enter “hospitality tax” territory.

Texas requires state hotel occupancy tax (HOT) on short-term rentals — including houses and condos — generally collected from guests. Local HOT can also apply depending on city rules. Texas Comptroller+2Go With Surge+2

Important: Texas doesn’t have one statewide STR law; cities and HOAs vary, and rule changes happen. RedAwning+1

Rental owner takeaway:
Your “tax cost” isn’t just property tax — it’s also HOT compliance, bookkeeping, and potentially local permitting.

4) Income Taxes on Rentals (Federal Reality)

Texas has no state income tax, but rental income is still taxable federally.

You’ll want to plan for:

• reporting rental income

• deducting legitimate expenses (maintenance, management, insurance, utilities, etc.)

• depreciation schedules

• personal-use vs rental-use allocation if you do a hybrid model

That hybrid mix is common at Cedar Creek — and it’s where people accidentally trip IRS rules. This is where a good CPA pays for themselves.

5) “Lake-Specific” Factors That Can Affect Value (and Taxes)

Because appraised value drives taxes, lake features matter. CADs and appraisers typically value premiums for:

• true lakefront vs lake-view vs lake-access

• frontage length

• open water vs protected cove position

• dock/boathouse presence and condition

• unobstructed views

These premiums show up not only on resale — they show up in your annual tax bill too.

6) Pro Moves for Cedar Creek Owners

If you’re buying

1. Confirm county + ISD first. It’s a real cost difference.

2. Budget without homestead unless you’re going full-time. Houston Chronicle+1

3. If you want STR potential, verify city/HOA rules before contract. RedAwning+1

4. Estimate true carrying cost: taxes + insurance + dock/shoreline maintenance.

If you already own

1. Check your CAD appraised value yearly and appeal if it’s off.

2. File homestead ASAP if Cedar Creek is now your primary. Kaufman CAD+1

3. Track STR taxes cleanly if you rent short-term. Texas Comptroller+1

How We Help Buyers & Sellers With the Tax Side

Val McGilvra & Lis Arias don’t give tax advice — but we do make sure taxes aren’t a surprise.

We help you:

• identify which county/ISD a property sits in

• estimate a realistic tax range based on current CAD values

• understand whether homestead applies to your plan

• spot STR compliance questions early

• price and market with real lake-premium comps (so your appraisal supports your sale)

Bottom Line

Owning a Cedar Creek Lake home means planning for taxes in three buckets:

1. Property taxes (county/ISD driven, no homestead unless primary). Tax Rates+1

2. Homestead savings if full-time (bigger in 2025). Square Deal Blog+1

3. Short-term rental taxes if you rent (state + possibly local HOT). Texas Comptroller+1

If you want, tell me:

• which side of the lake you’re looking at (Kaufman or Henderson), and

• whether you’re weekend, full-time, or hybrid rental