The death of a spouse could leave a significant financial burden to the widow or widower. This is one of the most common reasons why homes are sold. To protect the widow or widower from this risk of further loss, the government imposed “homestead exemption” to help keep surviving spouses stay and keep their homes.
If you or your parent is in a similar situation, a homestead exemption might help you or them pay less on insurance and property taxes on your home. Laws differ in each state, however, so make sure to see if the exemption is automatic or if you need to apply first to be considered exempted.
How Does it Work?
Because the amount of property tax you pay is dependent on the value of your property, the goal of the program is to help you reduce your payment by excluding a portion of it from tax assessment. If you live in a state where the allowed homestead exemption is say, $50,000 and you have a property valued at $300,000, you only get taxed for the $250,000.
Different states have different allowed limits, some greater than the others. Thus the amount you will save would be highly dependent on where you live.
A Question of Eligibility
Just as the exempted amount varies by state, so do the eligibility criteria. There are no universal rubrics as to who is eligible and it is placed unto the hands of the potentially eligible homeowner to check these with the tax department or assessor’s office. However, the most common criteria among the states include:
– a threshold age, usually 65
– the property must be candidate’s primary residence
– a condition on how much would be exempted depending on the physical situation of the potential candidate
To claim for exemption, the candidate must fill out necessary forms (in states where exemption is not automatic) and submit documents needed to verify their personal information. Other states even require their homeowners to apply for exemption every year. Make sure you understand the exemption process in your state. Ask for professional help if necessary.
A Recap of Benefits
a.) prevents the sale of the house to meet financial terms with the creditors
b.) provides the surviving spouse with shelter
c.) opens avenue for property tax exemptions