How do Homestead Tax Credits Work?

Homestead Tax Credits are designed to benefit renters and homeowners with low to middle incomes. They are designed to soften the blow of property taxes and rent. Those that qualify will see a return either through income tax credit or a direct refund. If you own a home, homestead tax credits will reduce the taxable value of your home by reducing the amount you have to pay in property taxes.

Who Qualifies for Homestead Tax Credits?

Individuals are judged on their household income, which includes all taxable income, as well as Social Security, Unemployment Compensation  IRA contributions and child support. The qualifying amount of household income varies across the different states. Generally, you must have been a legal resident of the state for over a year, and when applying for homestead tax credits either own or rent a property in that state.

What Documents Are Needed to File a Claim for Homestead Tax Credits?

If you own your home, you must produce a copy of your property tax bill. If you are renting, a rent certificate signed and completed by your landlord is required. The important thing to remember here is that homestead tax credits are not automatically calculated, so you must actively apply for it.

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