If you own a home and occupy it as your primary residence, you may be entitled to a homestead exemption, which saves you money on your property taxes each year. The homestead exemption is typically filed each year you qualify. However, refinancing your mortgage replaces the existing mortgage and may require you to refile immediately.
Homestead State Laws
Homestead laws vary in each state. There are 40 states that provide a property tax credit or homestead exemption to provide homeowners who occupy their residences a credit to lower property taxes. The amount a state provides differs, depending on the state. For example, in California, single homeowners are able to deduct $75,000 from their assessed property value, and families or couples are allowed to deduct $100,000 before calculating the taxable value of the home, as of 2011. In Florida, homeowners are entitled to deduct $25,000 from the value of the home for the homestead exemption. If the home is valued at more than $75,000, owners may deduct an additional $25,000, resulting in a total deduction of $50,000.
If your state offers a homestead exemption, you need to file an application at your county tax assessor's office when you purchase the home. You typically need to file a new homestead exemption after refinancing. To determine if this applies in your situation, review your refinance documents. Check to see if the new mortgage contains a provision vacating the existing homestead. If it does, you need to refile.
Eliminating the Need to Refile Homestead
You may eliminate the need to refile homestead by asking your refinance company to subordinate the existing homestead. Subordinating the homestead reestablishes the exemption by carrying it along with the new mortgage. Subordination keeps the current homestead effective and eliminates the need to file for a new homestead exemption.
Changes in the Title
A change in the title during refinancing may require you to refile a homestead exemption. If a name is added or removed, you likely need to file again. If you're unsure, you may file a homestead application listing all owners living in the home to be kept at your local property appraiser's office. If it's later determined that refiling homestead was required, the new homestead exemption applies, provided all other eligibility requirements were met. When the ownership of the home is converted to a trust, you also need to refile a homestead exemption.
- Legal Consumer: California Homestead Exemption
- Retirement Living: Taxes by State
- Miami-Dade County: Office of the Property Appraiser
- "Patriot Ledger"; When Refinancing, File New Homestead
- U.S. Legal: Subordination Law
- Allen County Indiana: Auditor FAQs
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Summary Page. Accessed April 17, 2020.
- Institute on Taxation and Economic Policy. "Property Tax Homestead Exemptions." Accessed April 17, 2020.
- Connecticut General Assembly, OLR Research Report. "State Homestead Exemption and Credit Programs." Accessed April 17, 2020.
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Pages 4-46. Accessed April 17, 2020.
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Pages 9 and 41. Accessed April 17, 2020.
- U.S. House of Representatives, Office of the Law Revision Counsel. "11 USC 522: Exemptions." Accessed Feb. 2, 2020.
- Federal Register. "Revision of Certain Dollar Amounts in the Bankruptcy Code Prescribed Under Section 104(a) of the Code." Accessed Feb. 2, 2020.
- Congressional Research Service. "Homestead Exemptions in Bankruptcy After the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)," Pages 31 and 36. Accessed April 17, 2020.
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.