how to qualify for homestead exemption
the homestead tax exemption can provide surviving spouses with ongoing property tax relief on a graduated scale so homes with lower assessed values benefit the most the homestead exemption is designed to offer both physical shelter and financial protection blocking the forced sale of a primary residence individuals may apply for a homestead property tax exemption if they have a primary residence and want to reduce the overall property tax bill associated with that residence some states offer the exemption to every homeowner while others require individuals to meet certain criteria such as the homestead exemption doesn t prevent or stop a bank foreclosure if the homeowner defaults on their mortgage homestead exemptions by statesome homestead exemptions are based on a flat reduction of all of the taxable value of your home a percentage calculates other homestead property tax exemptions lower valued homes receive a larger reduction using the first method the latter is a better choice for people with high value properties a version of the homestead exemption provision is found in every state or territory with some exceptions such as new jersey and pennsylvania however how the exemption is applied and how much protection it affords against creditors varies by state the homestead exemption is an automatic benefit in some states but homeowners must file a claim with the state to receive it in others 1protection from creditorsa few states including florida and texas afford unlimited financial protection against unsecured creditors for the home although acreage limits may apply for the protected property a limit for protection from creditors can range from 5 000 to 550 000 depending on the state 21the protection limits are not for the home s value but for the homeowner s equity a homeowner can t be forced to sell the property to benefit creditors if the equity held is less than the limit but creditors may force the sale if a homestead s equity exceeds the limits 3protection doesn t apply to secured creditors such as the bank that holds the mortgage the homeowner is protected only from unsecured creditors who may come after the home s value to satisfy claims against the homeowner s assets 4bankruptcy protectionfederal bankruptcy law shields a home from sale if the owner s equity does not exceed 25 150 if the bankruptcy case was filed after april 1 2019 56 homeowners commonly use the state s limits which often prove more favorable those who declare bankruptcy in new jersey or pennsylvania can get protection using the federal limits despite the absence of a state homestead exemption in these states but bankruptcy protection only protects against unsecured creditors it won t prevent a bank that holds a mortgage from foreclosing on the home 4deducting the homestead exemptiona homestead tax or property tax is typically applied to homes based on the assessed value by the local government tax assessor s office the homestead tax can be a percentage of the property s value or a fixed amount the homestead exemption may offer ongoing reductions in property taxes depending on state laws homestead tax exemptions usually offer a fixed discount on taxes such as exempting the first 50 000 of the assessed value with the remainder taxed at the normal rate with a 50 000 homestead exemption a home valued at 150 000 would be taxed on only 100 000 of assessed value a home valued at 75 000 would be taxed on only 25 000 fixed homestead tax exemptions create a progressive tax that s more favorable for those with modest homes the exemption is paid for with a local or state sales tax in some areas 7