“Homestead exemption” is a legal term that refers to the protection afforded to homeowners against property and school taxes, creditors and the transfer of a home upon the death of a spouse. Each state in the U.S. has enacted its own legislation on homestead exemptions. The exemptions are not based on an appraisal; instead, you must invoke your right to a homestead exemption by filing an application with the appropriate agency.
In many U.S. states, homesteads are eligible for tax reductions or exemptions. These exemptions vary from one state, county and municipal agency to another. For example, in Harris County, Texas, homeowners receive a 20 percent exemption on county taxes assessed against the value of their homes. Some local jurisdictions similarly exempt a portion of the homestead from city or school taxes.
The homestead exemption is applied against unsecured creditors (creditors who do not have a lien or claim to property or assets) in some states. The creditor cannot take the home away from the debtor or the debtor's spouse or family. In many states, when one spouse dies, the surviving spouse can live on the homestead for the remainder of his life. In some states, including Texas, homesteads are not protected from federal government debts or obligations.
Caps on Assessed Value of Property
Some jurisdictions have enacted ceilings or caps on the assessed value of property. These caps protect the homeowner from steep property tax increases due to appreciated property values. The percentage increase for property taxes is capped at a specific value, such as 10 percent of the property's assessed value.
Some state and local jurisdictions provide homestead exemptions on property taxes to individuals who are over the age of 65. In some cases, the homeowner must meet an income requirement. The exemption for seniors may apply to county and city taxes as well as to school taxes in some jurisdictions. The states of Kentucky, Georgia and Florida offer special homestead exemption terms to seniors over 65 years who own and reside in a home.
- State of Florida Department of Revenue: Homestead and Other Exemptions
- US Legal: Homestead Exemption and Forms
- Harris County Appraisal District: Property Tax Exemptions for Homeowners
- State of Kentucky Department of Revenue: Department of Revenue Sets 2011-2012 Homestead Exemption
- State of Georgia Department of Revenue Local Government Services Division: Homestead Exemption
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