A homestead exemption is a tax reduction that is applied to a owner occupied residence. In many states, they will reduce, once filed, the rate of increase of your property taxes by limiting/capping the rate of annual increase for the assessed value (the amount the taxing authority says your home is worth for tax purposes) applied to your home.
There are many types of possible exemptions for property taxes and it is encouraged you review what exemptions are available in your area with either your Real Estate Professional, Lender/Broker/Banker or directly with your local property appraisers office. Types of exemptions that may be available in your area are:
There may be many others or variations of the above. It is important when calculating your estimated property taxes you know what exemptions you'll be eligible for. These exemptions will result in a reduction of proposed tax liability and will reduce your monthly payment, allowing you to potentially finance more.
Be sure to get the documents you need for filing the exemptions you are eligible for and complete them early, and if allowed by your local property appraisers office, turn them in early - preferably right after closing - so you know you've done what you need for the next tax period.
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