Get Property Tax Discounts Using Homestead Exemption Rules

April 15, 2016 - 3 min read

Reduce Your Property Tax Bill With Homestead Exemption

As a homeowner with a mortgage, you have responsibilities. You also get some tax breaks.

For example, when you own a home and to finance it, you are responsible for paying the principal and interest on your loan each month; for carrying a hazard insurance policy on your home; and, for paying property taxes, when due.

In exchange, via a legal regime known as Homestead Exemption, homeowners can receive breaks on their real estate tax bills; and protections in the event of a bankruptcy or death in the household.

These are protections not afforded to renters. Only homeowners get to claim them.

Homestead exemption laws apply in most states. For proper tax and legal advice, check with your tax preparer and attorney.

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What Is Homestead Exemption?

Homestead exemption is a state-governed system of rules and procedures meant to protect the owners of homes. Most states offer some form of homestead exemption.

Homestead exemption has four parts to it.

The first part protects your home , preventing creditors from taking your home from you in the event of insolvency.

The second part protects a surviving spouse from losing the home to creditors, as a result of the same.

The third part allows tax-exempt homeowners to vote on property tax increases which are proposed by local governments.

And, the fourth part — the one most familiar to U.S. homeowners — is the one which grants a discount against a homeowner’s annual real estate tax bill.

Homestead exemption rules exclude a portion of your home’s value from the figure used to determine your real estate tax assessment. If your home is valued at $300,000, for example, a homestead exemption might base your real estate tax bill on a value of $250,000 instead.

This doesn’t mean that your home is worth less. It just mean that your real estate tax bill is calculated off a lower home value.

Depending on where you live, homestead exemption rules could save you $1,000 per year or more off your property tax bill.

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How Do I Qualify For Homestead Exemption?

Homestead exemption rules vary by state, and can sometimes vary by municipality, too.

For example, most states offer some form of exemption provided that homeowners meet certain prerequisites.

However, there are only certain states which offer specific homestead exemption to specific homeowner groups, including senior citizens, , the disabled, and those dealing with financial hardship.

In general, homestead exemption can only be used for a principal residence (i.e. primary home), and can only be claimed by the person(s) primarily responsible for paying the mortgage each month.

Using homestead exemption on a vacation home or an investment property is typically not allowed.

Homeowner “types” receive different treatment under the program, too.

In Georgia, for example, the standard tax exemption is $2,000. A disabled veteran, though, may be eligible for an exemption of up to $60,000.

Your tax preparer can help you determine your the value of your homestead exemption.

How To Claim Your Property Tax Reduction

If you own a home and meet the state’s rules, it’s likely that you’ll be eligible to claim the homestead exemption, and get a break on your real estate tax bill.

How you claim the exemption may vary.

In some states, a general homestead exemption is granted automatically. There is no paperwork to file and no forms to submit for approval. Your real estate tax bill reflects the adjusted home value and you make your payment as planed.

Other states require you to apply at the date of home purchase.

The application process typically includes a state-provided form with checkboxes, and requires you to show proof of ownership — usually with a photocopy of your settlement statement and a drivers license, or some other official document.

Senior citizens, military veterans, and homeowners with disabilities should expect to provide proof of “status”. This can include proof of age, proof of veteran status, and proof of disability, respectively.

Applications for exemption are reviewed by the local tax assessor’s office. In order to claim a full deduction, you must live in your home as of January 1 of the calendar year.

What Are Today’s Mortgage Rates?

There are benefits to owning a home instead of renting, and the protections afforded by the Homestead Exemption are just some of them.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

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Craig Berry
Authored By: Craig Berry
The Mortgage Reports contributor
With over 20 years in mortgage banking, Craig Berry has helped thousands achieve their homeownership goals.