What Is Homestead Exemption – Advantages & Filing in 2021

When it comes to real estate properties, one of the owners’ main concerns is regarding the taxes to be paid. Every tangible property falls within the taxation norms that the government has laid down. The tax rates and the assessment value depend on the municipality or the county regulating body in the area where your property is located. Property taxes are one of the main sources of revenues for the government, and hence, special importance is given to this tax type. Usually, every county provides professionals, like a Bay County property appraiser, who will help you to understand the taxes, exemptions, and other relatable facts.

homestead exemption

Ways to Assess a Property Tax

Since here, we will be talking about the property taxes, it is essential to understand the assessment process of the same. Not many owners are aware of this procedure, and that’s how they either end up paying more tax or neglecting the exemption benefits.

For this reason, here, we have discussed the entire technique in which the property tax for a house is assessed.

Valuation by the appraiser

First, the property appraiser will assess the house, consider its condition, and then calculate the values based on the market price. Every city and state has a different assessment rate. In some states, the appraiser will have to consider the entire market value for taxation. While on the other hand, in some states, a certain percentage of the market valuation is taxable.

Notifying the owner

Once the appraiser calculates the homes’ taxable valuation, he will notify the person who is liable to pay the tax. That person might be the homeowner or a beneficiary who has a power of attorney.

Reviewing the property and discussed valuation

After notifying the individual, the house, its condition, and the valuation will be reviewed once again by the property appraiser. Based on the millage rate, the taxes of the house will be calculated on the assessed value.

Submitting the legal documents

The final step involves submitting the appeal to the concerned judiciary, which might be a municipality or a county. Based on the documents submitted at the time of the appeal, the government’s body will notify you about the total tax you will be liable to pay. It is the job of a property appraiser to submit the government body’s appeal responsible for handling all the taxation procedures.

What Is Homestead Tax Exemption?

Every owner wishes to save as much as possible from the taxation value at the end of the day. Income and sales tax have lots of provisions where the value can be exempted and lowered. However, when it comes to property taxes, most people are unaware of how they can lower the levied tax and save finances.

In the US Governmental structure, the homestead tax exemption is one of the best methods in which the owners can avoid paying a huge amount of price in the form of property tax.

This is, in reality, more of a protection law as compared to an exemption law. According to this rule, a person can lower the property tax bills by fulfilling all the homestead exemptions’ eligibility factors.

Types of Homestead Exemptions

Different laws have been set up for different US states. For this reason, there are mainly two classifications of this particular category of tax exemption.

General homestead exemption

Under this category, you will get a fixed amount of reduction in your total property taxation. Certain criteria have been set up according to the homestead laws, which one will need to meet before claiming this tax exemption.

Special homestead exemption

In this category, special individuals will get the automatic homestead exemption like veterans, disabled people, etc. The criteria for getting the special tax exemption vary from one state to another. This is where you will need the help of a property appraiser who is way more experienced with all these facts.

Significance of homestead tax significance

Many of you must have heard about the statewide homestead tax since it is one of the best ways to prevent high taxation bills. However, not many of you are aware of the homestead’s advantage, and that’s why most people fail to meet the eligibility criteria. For this reason, we have discussed here the top significances you can enjoy, thanks to the homestead exemption provision.

1.   Protects the assets in the house

Sometimes, people lose their precious assets when they go bankrupt or have several credits pending with others. Usually, there aren’t many laws that can prevent this particular loss, except the homestead law. Under this rule, you will be able to protect your assets from creditors if you face a financial setback. To understand more about the relation of the homestead tax exemption and your assets’ protection, you can hire a property appraiser.

2.   Provides shelters to the surviving spouse

Sometimes, after the death of anyone individual, the surviving spouse faces many problems in paying the house’s taxes. If the tax is not paid within the proper time, high chances are there of eviction. This is where the homesteading rule will help the surviving spouse since it lowers the taxation value and allows the spouse to have shelter.

3.   Stops the forced property sale

Since homestead exemptions are available in almost all the states in the US, you will be able to prevent the forced sale of your property under any circumstance, like mortgage dues, dues on property taxes, and so on. So, with this particular law and the help of a property appraiser, you won’t lose your home to creditors.

4.   Reduce the annual property bills

The homestead will provide you a discount on taxes, which will lower the annual taxation bills on the concerned piece of property. This will further help you to save a lot of money undoubtedly.

How Does the Homestead Tax Exemption Work?

It is the responsibility of every homeowner to understand how the homestead statutes work in various US states. This will help you to achieve the required criteria of this tax-exempt provision. However, sometimes, exemptions can be hard to assess. That’s where you will need a property appraiser.

Two ways are there in which the homestead can be calculated. In states where the exemption is a fixed dollar amount, you will have to pay the exact rate that the government has set. Such taxation will help the owners having huge valuation properties. However, this is a hurdle for those with low incomes.

In certain cases, the total tax amount is decreased by a percentage based on the assessed valuation. As a result of this homestead protection plan, a person with a low income will be able to safeguard his interests.

Know Your Eligibility for Homestead Tax Exemption

For raising the homestead claims, you need to be eligible for the law. Hiring a property appraiser will help you to understand the various criteria and decide whether you have fulfilled them or not. If not, they will advise you about the ways of meeting the requirement. Homestead tax-exempt provision is applicable for:

  • Owners having low income
  • Veterans
  • Disabled people
  • Senior homeowners

If you fall within any of these categories, you will be able to raise the claim against your property to reduce the tax bills. However, if you match two or more criteria altogether, you won’t be able to get the reduction due to multiple category fulfillments.

F.A.Qs

Does all properties liable for homestead protection?

You cannot apply for homestead protection if you have a rental property or an investment property. For your property to become eligible for the same, you need to live in that house.

I’m a veteran and a senior resident. Will I get an exemption for both categories?

No, you wouldn’t get the exemption for both categories. Homestead reduction is applicable for anyone criterion, no matter how much you satisfy.

How much tax will be reduced under homestead law?

Based on how the homestead tax exemption has been set up in your state, the tax will be deducted in either a fixed amount or a percent on the valuation form. This amount will be calculated by a property appraiser, who will then review all your eligibility documents and make an appeal to the taxation governmental body. 

Leave a Comment