Homestead Exemption: What It Is, How It Works

To put it simply, the Homestead Exemption reduces property taxes for homeowners. In this article, read and find out more about how it works!

Homeowners [Photo: Provident Protection Plus]

According to Kagan, the Homestead Exemption is also intended to provide both physical and financial protection against a forced selling of a primary residence. Unfortunately, the Homestead Exemption does not intercept a bank from foreclosing a house if the homeowner fails to pay their mortgages.

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How Homestead Exemption Works

According to Jones, a homeowner can apply for a Homestead Exemption if they want to reduce the property tax bill connected to their primary residence. A homeowner may not even have to meet certain requirements to be eligible for the exemption. This is because the offer is provided to every homeowner in some states. However, for most states, there are still certain requirements that must be met. In general, a homeowner may be an individual with a disability, an older adult, or a veteran. They may also be a law enforcement official or a first responder with a disability.

Some homestead exemptions depend on a fixed value reduction of all of the taxable value in a home. However, in other circumstances, the Homestead Exemption is calculated by a percentage. Homes with a lower assessed value generally receive a larger reduction. On the other hand, the percentage calculation is the better choice for homeowners with high-value homes.

Provisions in the Homestead Exemption can be found in every state except for New Jersey and Pennsylvania. However, depending on the state a homeowner lives, how much assistance it provides and how the exemption is applied will still vary. In some states, the Homestead Exemption is automatic, while in other states, homeowners must still file a claim.

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