The Homeowners Exemption: Are You Eligible?

Purchasing a home comes with a lot of paperwork. Though it's no small task to keep track of everything, it's important to stay on top of it all. Within that pile of papers, you might find some valuable forms that will help you save money on your real estate taxes.

Since property taxes can amount to an impressive sum each year, any savings are welcome. A homeowners exemption will give you an easy way to trim your tax bills with minimal effort.

What is a Homeowners Exemption?

A homeowners exemption protects resident homeowners from increases in property taxes by restricting the amount that the taxable value of their homes can rise every year.  Property taxes are a necessary evil for homeowners because they fund programs and services provided by local government. While property taxes are important, when they rise too quickly, they can become a burden and even have a negative effect on the community when people are forced to sell because they no longer can afford to live there.

A homeowners exemption will reduce the amount that you owe on your taxes, helping you keep more money in your pocket each year.

Who Qualifies For a Homeowners Exemption?

To qualify for an exemption on your property taxes, you must occupy the property as your primary residence. If you rent the property to someone else and live elsewhere, you will not qualify for the tax break.

If you have two properties, you can only claim an exemption for the one you spend the majority of your time occupying. If you split your time equally between homes, you'll need to check the minimum occupation requirements in your state to determine whether you still qualify for an exemption. You cannot claim a homeowners exemption for two homes in the same state.

If you own property in two states, you may be able to claim exemptions on both. However, taking the exemption in another state may require you to give up your resident status in the first, complicating matters significantly.

Requirements For an Exemption

Homeowners exemptions vary by location, so you'll need to research what's available in your state. There are several key points that you need to know about. These include:

• checkThe date that you must occupy the home by
• checkThe deadline for filing your exemption
• checkThe necessary paperwork  and documentation required for an exemption

How Does a Homeowners Exemption Work?

If you're eligible for a homeowners or homestead exemption, you will only be responsible for paying taxes on a portion of your home's assessed value, rather than its full value. The portion varies by state, but nearly all homeowners stand to save a significant amount of money by taking advantage of this opportunity.

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Factors that will impact the amount you can save with your homeowners exemption are:

• checkThe assessed value of the property 
• checkExemption limits in your county
• checkCounty Tax Rate

The county assessor is responsible for managing homeowners exemptions. When you purchase a new home, you will receive an application in the mail from the assessor's office for a homeowners exemption. If you wish to claim the exemption, you must mail this back to the assessor within the designated time frame. The assessor's office will then apply the exemption to your property tax bill automatically each year, reducing the total sum that you're required to pay.

Tax exemptions are a smart way to minimize the amount you owe to the government each year. Most homeowners exemptions require a single filing and stay active as long as you maintain the same primary residence. Contact your assessor's office and research the possible exemptions in your state to learn more about what you could be eligible for in your new home.