Every state but New Jersey offers homeowners the opportunity to file a homestead tax exemption, which lowers the taxable value of our homes for property tax purposes.
As the name “homestead” indicates, this tax break is available on your primary residence only. Investment property and second homes are not eligible.
In most cases, the homestead exemption is a fixed discount on taxes.
Here in Texas , where the median home value is $197,500, we get a $25,000 exemption for school taxes, and a $3,000 exemption for certain county taxes. Seniors and disabled homeowners also qualify for an additional $10,000 exemption.
If you’re a senior citizen with a home valued at $197,500, you’ll be taxed on $159,500.
In California, where the median home value is $611,190, the exemption is only $7,000. If your home is valued at $611,190 you’ll be taxed on $604,190.
The second benefit of a homestead exemption is shelter from unsecured creditors.
If bankruptcy, illness, or the death of a spouse is causing creditors to call, your homestead exemption can prevent creditors from forcing the sale of your home. If the equity in your home is less than your homestead exemption, there’s nothing they can touch. Beyond that, State laws apply. Rather than force the sale of a home, unsecured creditors can obtain a judgement and file a lien against your home – for payment when and if it is sold.
Here in Texas, judgement liens can remain attached to a property for ten years.
If you’ve just purchased a home, be sure to file your request for a Homestead Exemption with the County immediately. Different states and counties have different deadlines for filings, so don’t take a chance. In Texas, the exemption might transfer with the sale of the house, but it’s still best to check with the County to make sure you’re covered.
While we might enjoy some of the services our taxes pay for, I have yet to meet anyone who would prefer to pay more taxes than absolutely necessary.
If you’re getting ready to buy a home in Texas, call Homewood Mortgage, the Mike Clover Group. We’re proud to offer fast service, plus the lowest fees and rates you’ll find in Texas.
Call us today at 800-223-7409