A homestead estate is real property used as the owner’s primary residence; it must be owned and occupied by a person or family. One benefit is that it offers legal protections and property tax benefits under homestead laws. These laws help you, as a homeowner, stay financially secure and lower your property tax bills.
Homestead Property and Status
Homestead property is a home the owner lives in as their primary residence. Gaining homestead status allows you to receive legal protections and tax exemptions. To qualify in most states, you must apply and prove the property is your primary residence with your local county tax office.
Common Mistakes When Applying for Homestead Status
Homeowners often make errors when applying for homestead status.
Wrong property classification: Listing the property as a rental or secondary home instead of a primary residence.
Missed deadlines: Not submitting applications on time or failing to renew exemptions when required.
Incomplete documentation: Forgetting necessary documents, like proof of residency or property deeds.
Ownership errors: Not updating property titles after events like inheritance or divorce.
Types of Homestead Exemptions
Many states, counties, and jurisdictions offer different homestead exemptions, including:
General homestead exemption: Reduces taxable value for most homeowners using the property as their primary residence.
Senior citizen or 65 and older exemption: Offers extra property tax savings for homeowners above a certain age, often with income limits.
Veteran and disabled veteran exemption: Provides property tax reductions for eligible veterans, with some jurisdictions granting full exemptions for veterans with 100% service-connected disabilities.
Disability exemption: Gives tax savings to homeowners with qualifying disabilities. It usually has rules different from veteran exemptions, and you must qualify through federal disability designations and paperwork.
Exemption types and values depend on local laws, though they all help reduce property tax bills!
If you’re unsure which homestead exemptions you qualify for, use Ownwell! We’ll help you retroactively apply to homestead exemptions you might’ve missed and can monitor your exemption status for you!
Legal Protections Under Homestead Laws
Homestead laws protect a primary residence from certain creditors. These laws prevent forced sales for debts like medical bills or personal loans. However, they typically don’t cover mortgage debts, property taxes, or construction liens.
Property Tax Benefits of Homestead Status
Homestead properties get unique tax benefits and legal protections, including caps on tax increases. Non-homestead properties, such as rentals, vacation homes, or commercial properties, don’t get these exemptions or caps. Without these exemptions, non-homestead properties often have higher taxable assessed values. Over time, this gap grows as a property’s value increases — highlighting the advantage of homestead status for property tax savings.
Example 1: A home with a $25,000 exemption
Year 1 savings: A home assessed at $300,000 with a $25,000 homestead exemption has a taxable value of $275,000. At a 2% tax rate, the tax bill is $5,500 instead of $6,000, saving $500.
Five-year impact: With a 5% yearly increase in home value, the tax cap keeps the homestead tax bill at $6,043, while a non-homestead owner pays $7,293. The total five-year savings: $4,372.
Example 2: A home with a $50,000 exemption
Year 1 savings: A home assessed at $400,000 with a $50,000 homestead exemption has a taxable value of $350,000. At a 1.8% tax rate, the tax bill is $6,300 instead of $7,200, saving $900.
Five-year impact: With a 5% yearly increase in home value, the homestead tax bill goes up to $6,796, while a non-homestead owner pays $8,752. The total five-year savings: $7,051.
Homestead Requirements
To get homestead status, you must occupy the property as your primary residence and apply for an exemption. Typical requirements include:
Proof of residency (e.g., driver’s license or state-issued personal ID)
A copy of the property deed
A completed exemption form. Note that some areas require annual renewals or have filing deadlines.
Why Homestead Status Matters
Homestead status protects you and reduces your tax bills. These savings can add up to thousands of dollars over time, especially in high-growth areas.
Learn How Ownwell Can Help You
Apply for your homestead exemption to lower your tax bill. Ownwell can help secure retroactive benefits and file tax appeals if you missed past exemptions.
On average, we save homeowners $1,102 on their property tax bill. See how much you can save with Ownwell today!