What is a Property Tax Homestead Exemption?

Most states have multiple programs to reduce property taxes for certain groups of people or properties used for certain purposes. The most common property tax exemption, available in the majority of states and counties across the United States, is the homestead exemption.

The homestead exemption is a broad set of policies designed to protect the homes of citizens from foreclosure, bankruptcy, and property taxes. In localities that have a property tax homestead exemption, you can qualify for lower property taxes by proving to your property tax assessor that the property for which you are claiming an exemption is:

  1. Your primary legal residence

  2. The only property for which you are applying for a homestead exemption

Once you have qualified for your locality's homestead exemption, a portion of your home's taxable value will be exempted from property taxation. For example, the California homestead exemption will exempt $7,000 of the home's value from taxation. Therefore, a home assessed at $100,000 will only be taxed as if it was worth $93,000. In this situation, with an effective property tax rate of 1% the homestead exemption will yield a yearly tax savings of about $70.00.

How much is the homestead exemption?

The homestead exemption amounts vary widely by state, with generous homestead exemptions being one of the major reasons the median property taxes in states like Louisiana and Oklahoma are are as low as they are. Here are some of the homestead exemptions available in different states:

  • California Homestead Exemption

    $7,000 homestead exemption for residential properties

  • Florida Homestead Exemption

    $50,000 homestead exemption from property taxes, with the last $25,000 of the exemption not applicable to school taxes

  • Louisiana Homestead Exemption

    $75,000 homestead exemption for residential properties

  • Michigan Homestead Exemption

    Full exemption from school tax for residential properties

  • Mississippi Homestead Exemption

    $7,500 homestead exemption for residential properties, limited to $300 of actual tax savings

  • New York Homestead Exemption

    $30,000 homestead exemption for most residential properties from school taxes only (known as the School Tax Relief Program, or STAR). Limited to homes valued under $500,000

  • Oklahoma Homestead Exemption

    $1,000 homestead exemption for residential properties ($75-$125 tax savings)

  • Rhode Island Homestead Exemption

    20% homestead exemption for residential properties

  • Texas Homestead Exemption

    20% homestead exemption for residential properties. Additional exemptions available for seniors and disabled homeowners

  • Kentucky Homestead Exemption

    $36,000 homestead exemption for residential properties for disabled or senior homeowners. Exemption amount is adjusted every two years

How do I apply for a homestead exemption?

In many states, you have to explicitly apply for the Homestead Exemption in order to get tax savings. When you buy a new home, the lawyer who fills out your titlework may do this for you - but this is not always the case. To apply for a homestead exemption, or verify that you are already receiving one, contact your property tax assessor directly.

Depending on your location, you may need to reapply for certain exemptions on an annual or semiannual basis - so make sure your assessor confirms any requirements you have to fulfill to keep enjoying your homestead exemption benefits. You can find homestead exemption applications at your local tax assessor or county clerk's office.

Can I get a homestead exemption for rental properties or vacation homes?

No. Each property owner can get a homestead exemption on only one property, and that property must be their primary residence. Even if your rental property is the primary residence of your tenants, they don't qualify for the homestead exemtion because they don't own the house - and you don't qualify for the homestead exemption because you don't live there. This is one of the most controvertial aspects of the homestead exemption, because the low-income families it was designed to assist often rent, and therefore don't qualify for any benefits from the exemption.

Similarly, any vacation homes or investment properties you own do not qualify for the homestead exemption because they are not your primary residence. As a result, you will wind up paying the full property tax due in these situations. This is an important factor to take into account when comparing property tax rates - the median property taxes available on this site are based on owner-occupied homes which qualify for any homestead exemptions available in their county.

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