Untitled Document

3 facts most homeowners don’t know about the homestead exemption

homestead exemption

If you’re a homeowner, taking advantage of a simple “exception to the rule” could cut your property taxes by up to 25 percent.

What is a homestead exemption? Tax benefits for homeowners

A homestead exemption is a property tax discount often given to someone who owns a property and who lives in it as their primary residence. Joshua Jarvis of Jarvis Team Realty in Lawrenceville, Georgia, explains, “In our state, not every county has a homestead exemption. The process of getting an exemption is relatively simple, but the ‘hard part’ is actually knowing it exists.”

According to the Texas Comptroller of Public Accounts, a homestead exemption removes a portion of a home’s value from taxation, lowering taxes as a result.

A home appraised at $100,000 may qualify for a $25,000 exemption, an amount mandated for school districts. As a homeowner, you would only pay school taxes on your home valued at $75,000, in this case. Matt Myjak, licensed Certified Public Accountant (CPA) and co-founder of Entitled, an online service that allows homeowners to correct missed tax exemptions in minutes and recoup refunds on overpaid property taxes, currently serving Cook County, Illinois, supports the homestead exemption because it supports the homeowner. “Exemptions like this allow homeowners to save money on their property taxes. This happens by excluding a portion of their home’s value from assessment,” he says.

Because it reduces property taxes, state representative Martin Grohman of House District 12 considers a homestead exemption very valuable to constituents.

He tells Cornerstone, “An interesting nuance is that the exemption is partially funded by the state. It’s also partially funded though the local municipality. It effectively shifts the property tax burden onto out-of-state (typically vacation home) property owners.”

Wondering if you qualify? Jarvis says to start simple. Google “County + Homestead” and see if your county has it and how to get it. “Most of the time, it’s simply filling out a form and turning it in. One word of caution. These exemptions often have deadlines for you to turn the forms in. Usually before April.” (You can find more information on filing past deadline below.)

If you have questions about your mortgage, ask your loan officer for help. Find a Cornerstone Home Lending office near you.

Who qualifies for a homestead exemption? 3 requirements to remember

There’s a lot of confusion surrounding the homestead exemption. Like the fact that many homeowners haven’t heard of it and are missing out on tax savings.

Get started

To find out if you qualify for this exemption, here’s what you need to know:

  1. Your home must be your primary residence.

homestead exemption

These tax savings may be available to you — if you own your home, live in it full-time, and pay your taxes. “In most states, the general homestead exemption only applies to a principal residence. And it is only claimed by the taxpayer,” Myjak says.

The Texas Comptroller of Public Accounts states that a residence homestead is defined by individual ownership. (Not related to a corporation or another business entity.) As long as the criteria are met, a homeowner could take advantage of additional exemptions for certain groups, including those who are disabled, veterans, and senior citizens, offered in many states.

Here’s another easy way to save money on your mortgage. Find out if refinancing could help reduce your monthly payment.

While refinancing could make a significant difference in the amount you pay each month, there are other costs you should consider. Plus, your finance charges may be higher over the life of the loan.
Next

 

  1. Timing is everything.

homestead exemption

Jarvis mentioned above it. It’s likely that there will be a deadline to file for a homestead exemption in your area. It’s ideal to apply for the exception in your first year of ownership. But it’s never too late to get in on the savings. You can file up to one year after the deadline has passed. Rick Snow, designated broker at Exit West Realty in El Paso, Texas, says that in his state, homeowners must own the home on January 1 to qualify for the exemption. In many states, however, this January 1 deadline does not apply to homeowners who are disabled or who are age 65 and over.

Of the homeowner without special exemptions, Snow says, “So, if you purchase your home in August of 2017, you wouldn’t qualify for the exemption until January 2018. Different states may have different specifics.”

Next

 

  1. Every state is different.

homestead exemption

State homestead exemption laws vary. Denise Supplee, realtor, investor, landlord, and co-founder and operations director of SparkRental.com, says, “The amount of the discount depends on your location and your status. In many cases, such as Philadelphia, there may be local homestead programs. So, it is important to contact your state and local housing departments.” You can also reach out to your loan officer for help.

Myjak explains that the process for receiving an exemption varies by exemption type and county. In addition, some counties apply exemptions automatically. Some require homeowners to apply for it once. Others require an annual application. “After purchasing a home, check with your local assessor’s office so available exemptions are appropriately applied,” Myjak says. “If exemptions are missed, it’s often possible to correct them. For example, Illinois allows exemption corrections for up to three prior years.”

Are you a homeowner yet? Make prequalifying for a mortgage quick and easy by using our free LoanFly app.

A homestead exemption presents a unique opportunity to homeowners, and eligibility is worth checking out. Whether you have questions about your homestead exemption or want to learn about other ways to save on your mortgage, we’ve got you covered. You can contact your loan officer for help.

For educational purposes only. Please contact your qualified professional for specific guidance.

Sources deemed reliable but, in addition, not guaranteed.