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Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.

What Is The Homestead Exemption?

For many people, the idea of owning a home is a central part of the American Dream. Owning your own property gives you a sense of security and control in your life, and can be a great investment. But for some people, buying a home is simply not possible. Fortunately, there are ways to make homeownership more affordable, including the homestead exemption. Here’s what you need to know about this valuable tax break.

What is The Homestead Exemption and How Does It Work?

The homestead exemption is a tax law that varies from state to state that helps homeowners reduce their tax on their property.  This exemption would remove a portion of the value of the taxation rate on your property.

For example, if an individual’s home is valued at $100,000, and this person files for homestead exemption, $25,000 is subtracted from the value. This person will only be taxed on the value of $75,000 instead of $100,00. 

Homestead Exemption

When Can You Claim The Homestead Exemption?

To qualify for the homestead exemption for the current tax year, the homeowner should have owned the property as of January 1. The homeowner should have also filed the tax application on the date the property tax returns are due in their current county. For example, in Texas, persons have until April 30th to file for homestead exemption. In Georgia, persons have up until April 1st. In Florida, homeowners have until March 1st, etc. 

Claim The Homestead Exemption

How Much Are My Property Taxes if I Am Eligible?

If a homeowner is eligible for homestead exemption, there can be two ways this can be calculated. This property tax can be calculated by doing the following:

  • Flat dollar homestead exemption – With this type of homestead exemption, a specific amount will be lowered based on a particular number. For example, a specific property is valued at $400,000, and if the state you reside in allows a homestead exemption of $40,000, you will be paying the tax of $360,000. 

 

  • Percentage exemption – With the percentage exemption, the taxable value based on an individual’s property is lowered by a certain percentage. Let’s take, for example, if your homestead exemption is 20%, knowing that your residence is worth $200,000, you would have to pay taxes on $160,000. 

 

How Much Are My Property Taxes

Is There a Limit To How Many Years I Can Claim The Homestead Exemption For Tax Purposes?

The good news is that after an individual has filed and received their homestead exemption for their property, they wouldn’t have to file again. Someone would only have to file again due to a disability or a qualifications change.

Claim The Homestead Exemption For Tax Purposes 

Do You Have to Pay State or Federal Taxes on Money Received from a Life Insurance Policy?

Can I Use It On Multiple Dwellings? 

Some rules and regulations apply to the homestead exemption, and each state varies based on the exemption. For example, an individual or a married couple may wonder if they can have homestead exemption on each property. In all states, the exemption tax reduction is only available for someone’s primary residence, not for rental properties, vacation homes, or multiple houses.

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Nothing implied or stated on this page should be construed to be legal, tax, or professional advice. The Law Dictionary is not a law firm and this page should not be interpreted as creating an attorney-client or legal adviser relationship. For questions regarding your specific situation, please consult a qualified attorney.