A homestead exemption is a property tax exemption that can reduce annual property taxes on a homeowner’s primary residence. In many states, this legal provision protects a specified amount of equity in a primary residence from being seized by creditors in bankruptcy or lawsuit scenarios. In addition to property tax relief, homestead exemptions often shield a portion of equity from certain creditors. 

For property taxes, the exemption typically works by cutting the assessed value used to calculate your tax bill. For example, if your home has an appraised value of $350,000 and your state offers a $50,000 exemption, your taxes would be calculated on $300,000 instead of the full value. 

The term “homestead” refers to the house you live in most of the year, including the land it sits on. This does not include vacation homes, rental properties or investment properties. State laws define how much land can qualify, with some states setting acreage limits for urban and rural properties. 

Homestead laws are created at the state level and often implemented by counties or cities. This means the specific protections and savings available to you in 2024 depend entirely on where your property is located. 

Simple example of tax savings: 

In this example, the homestead exemption saves the homeowner $750 per year. 

Property taxes are calculated by multiplying your home’s assessed value by local tax rates set by your county, school district and other taxing units. A homestead exemption lowers that assessed value for qualifying property owners, which directly reduces your tax bill. 

The amount of the homestead exemption can vary significantly from state to state, with some offering flat dollar amounts and others offering percentage reductions. Some states use a combination of both, applying different exemptions to school district taxes versus county taxes.

Beyond tax relief, many states offer homestead protection in civil lawsuits or bankruptcy. This shields some or all of your home equity from certain creditors trying to force a sale of your property. 

Protection levels vary dramatically by state: 

States like Texas and Florida offer substantial homestead protection with acreage limits rather than dollar caps. Texas, for example, protects homesteads up to 10 acres in urban areas or 100 acres in rural areas with no dollar limit on equity. 

Federal bankruptcy law allows you to choose between the federal exemption system or your state’s system, depending on state rules. This is why anyone facing financial hardship should consult a qualified attorney for personal advice. 

Homestead protections typically do not block obligations like: 

• Mortgages and home loans 

• Property taxes owed to the county or city 

• Child support payments 

• Mechanic’s liens for home repairs 

• Certain federal debts 

This section is educational only. If you’re considering how creditor protection might apply to your situation, please seek qualified legal and tax guidance before making decisions.

Eligibility for a homestead exemption is primarily based on ownership, occupancy and residency as of a specific date in the tax year. In most states, this date is January 1.

To qualify for a standard homestead exemption, you typically need to meet these requirements: 

• Ownership: You legally own the home in your name, through a qualifying trust, or another structure recognized by local law. 

• Primary residence: The property is your permanent residence where you actually live most of the year. 

• State residency: You meet any state residency rules, such as being a legal resident of the state where the property is located. 

Many states offer larger exemptions or additional exemptions for certain groups: 

• Seniors: Homeowners age 65 or older on or before January 1 of the tax year may qualify for additional exemptions, tax freezes or caps on increases. 

• Disabled homeowners: Those who are totally disabled under Social Security Administration standards or state definitions can often receive extra benefits. Documentation from the federal Social Security Act’s disability insurance program may be required. 

• Veterans: Disabled Veterans with service-connected disability ratings often qualify for partial or 100% exemptions. Some states extend benefits to an unremarried Surviving Spouse of a Veteran. 

• Surviving Spouses: Surviving Spouses of first responders, Military personnel or qualifying seniors may retain special exemptions in some states. 

Most states restrict you to one homestead exemption per person or married couple. You generally cannot claim exemptions on second homes, rentals or vacation properties. 

Before applying, verify specific requirements — including any income limits or documentation — with your county tax assessor or local tax assessor’s office. 

Most homeowners do not receive a homestead exemption automatically. You usually must file a homestead exemption application with your county or local tax office.

1. Confirm your residence status: Make sure your property is your primary residence as of the key date, typically January 1 of the tax year you’re applying for. 
2. Get the correct form: Obtain the homestead application form from your county assessor, appraisal district or tax commissioner website. Many offices also provide forms during normal business hours. 
3. Gather required documents: You’ll typically need: 
   1. A driver’s license or state ID showing the property address 
   2. A property deed, closing statement or mortgage statement proving ownership 
   3. Acceptable proof of age, disability or Veteran status if applying for additional exemptions (such as documentation from Veterans Affairs or the Veterans Administration) 
4. Submit by the deadline: File your application before the cutoff date 

• Many states require filing between January 1 and a spring deadline (commonly March 1, April 1 or April 30). 

• Some jurisdictions allow late applications up to one or two years after the tax year, though this varies by local rules. 

• Georgia, for example, accepts applications up to 45 days after the assessment notice is mailed. 

Once your exemption is approved, it typically renews automatically each year as long as you still qualify. However, you must notify the tax office if you move, change ownership or convert the home to a rental. 

Tip for new buyers: Ask at closing or soon after about how to apply in your area so your exemption is in place for the next tax year. CrossCountry Mortgage loan officers can help you understand how local property taxes and exemptions will affect your monthly payment. 

A general or standard homestead exemption is usually available to most property owners who meet basic residency requirements. Beyond that, many states and counties offer additional variations.

Common exemption types 

Exemption amounts can differ by jurisdiction even within the same state. Some counties or cities offer larger local homestead benefits than the state minimum requires. 

Example of layered exemptions 

Suppose a homeowner in a state with a $25,000 general exemption also qualifies for a $10,000 senior exemption. On a home with an assessed value of $250,000: 

• Taxable value = $250,000 – $25,000 – $10,000 = $215,000 

If the combined tax rate is 2%, the annual tax would be $4,300 instead of $5,000 — a savings of $700 per year. 

Review your annual tax bill to confirm that all eligible homestead exemptions appear. Contact the tax assessor’s office if you notice discrepancies or believe you qualify for exemptions not yet applied. 

Your homestead status is not permanent if your situation changes. Failing to update the tax office can lead to disallowance of the exemption and back taxes. 

• You sell the home or move to a new primary residence, whether in the same county or a different state. 

• You turn the property into a rental, second home or vacation property instead of your permanent residence. 

• Ownership changes occur, such as divorce, marriage, adding or removing an owner, or inheritance. 

• Retroactive cancellation of the exemption and repayment of tax savings from one or more prior years, often with interest or penalties. 

• Adjusted future tax bills and possible escrow shortages if you have a mortgage. 

Some states allow you to transfer or “port” certain benefits — like a tax cap or senior exemption — to a new residence homestead, subject to deadlines and rules. 

Keep copies of your approval letters, applications and supporting documents. This helps you respond quickly if the tax office reviews your homestead status. 

For buyers, a homestead exemption can lower ongoing housing costs by reducing property taxes and, therefore, the monthly escrow portion of your mortgage payment. 

When you’re shopping for a home, the tax projections you see may not yet reflect the exemption you’ll receive once you move in and apply. A CrossCountry Mortgage loan officer can help estimate your post-exemption payments so you can plan more accurately.

For those who already own a home, adding or updating a homestead exemption can: 

• Reduce financial strain in high-tax areas 

• Make it easier to stay in a long-time home on a fixed income 

• Provide partial equity protection in some financial hardship situations, depending on state law 

Exemptions do not change the terms of your mortgage itself. However, they can change your total monthly housing cost when taxes are paid through escrow. 

If you’re considering a purchase, refinance or home equity option, speak with a licensed CrossCountry Mortgage loan officer and your local tax office to understand how homestead exemptions fit into your broader homeownership plan.

Examples provided for illustration purposes only and is not intended to provide mortgage or other financial advice specific to the circumstances of any individual and should not be relied upon in that regard.