How Homestead Tax Exemption Lowers Real Estate Taxes

A homestead tax exemption is an exemption that can lower the assessable value of one’s principle residence. It was designed to protect the value of the homes of residents from creditors, property taxes and circumstances beyond their control.

Who Qualifies

Depending on the state that you live in will decide on if there is a homestead exemption. Some states offer a full exemption from real estate taxes while most offer a credit against the value of the home. Homestead exemptions are only available to residents who qualify and apply for one.  You will need to apply each year.

How It Works

It is possible to lower your overall property taxes. The reason why it is an exemption removes a portion of your property value from being taxed.  This in turn lowers your taxes. A monetary example is if your home is worth $200,000 and you qualify for an exemption amount of $25,000 then your taxable portion is the remaining $175,000. Remember that this exemption only can apply to your principle residence, the place where you reside.

When to Apply

Every state has different rules on when you can apply for a homestead exemption. All of the rules and regulations will be listed on the application. You will receive a letter of exemption and how much you are awarded. When you file your taxes for that year you will enter this number for the homestead exemption.

Charges

There is no charge for applying for a homestead exemption. There are companies that will charge a fee for filing the homestead exemption for you. Do not be confused by the letters or postcards that they send to you. Please use their services only if you find it is beneficial to you. Most applications though are easy to fill out on your own without a service. You can request that the form be sent to you or you can find most forms on the internet for immediate use.

A homestead exemption is a way that you can help protect the value of your home while at the same time lowering or eliminating the real estate tax on said property. Keep in mind that the amount will change each year as will the value of your home. It benefits you as a taxpayer and as a home owner. It only makes sense that if you qualify for the tax exemption then you should take it.


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