Θ What Are Homestead Exemptions

What Are Homestead Exemptions

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:

Homestead Exemption - This exemption will reduce the amount of property taxes by typically providing a reduction in assessed value similar to exemptions used when filing your personal income taxes.
Widow's and Widower's Exemption - This exemption again could provide a flat reduction in your taxes and is designed for spouses who have experienced the loss of a partner. Typically, this exemption will end upon remarriage.
Disability Exemption - This exemption is designed for a home buyer who is totally and permanently disabled.
Military Disability Exemption - This exemption is designed specifically for disabled former or current members of the armed service. Typically, an ex-service member must prove they have at least a 10% disability.
Exemption for the Blind - Those who are blind may qualify for this exemption. If claiming exemption based on blindness, the applicant typically must have a certificate of blindness issued by the Division of Blind Services of the Department of Education, the Federal Social Security Administration, or the Veteran's Administration.
Service Connected Total and Permanent Disability - An honorably discharged veteran with service-connected total and permanent disability may qualify for total exemption of homesteaded real estate used and owned as a homestead. Under certain circumstances this benefit can carry over to a surviving spouse.
Exemption for Totally and Permanently Disabled Persons - This exemption is designed for those who are totally or partially disabled and requires the use of a wheel chair for mobility. In addition, there may be income restrictions associated with the full exemption status
Additional Homestead Exemption for those 65 and older - If you're 65 years or older, you may also be entitled to an additional exemption benefit.

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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