Demystifying the Homestead Exemption: What Every Homeowner Should Know

At Innovative Mortgage Brokers we are proud to provide our clients with comprehensive explanations of the various components that make up the home buying process and how to save money. Today, we’re going to delve into the concept of the homestead exemption — an essential aspect of homeownership that could potentially save you a significant amount of money.

What is a Homestead Exemption

A homestead exemption is a legal provision that helps homeowners protect a portion of their home’s value from property taxes or potential creditors. It’s an important tool for homeowners, particularly those on a tight budget or those looking to safeguard their greatest asset — their home.

The Benefits of a Homestead Exemption

Reduced Property Taxes

One of the main advantages of a homestead exemption is the potential reduction in property taxes. Depending on your state’s laws, a certain value of your home may be exempted from taxation, leading to lower annual property tax bills.

Protection from Creditors

In some states, a homestead exemption can protect homeowners from having their home sold off to satisfy debts. This protection can be a lifeline during financially challenging times.

How to Qualify for a Homestead Exemption

Residency Requirements

To qualify for a homestead exemption, the property in question must be your primary residence. This means you live there most of the time and consider it your main home.

Application Process

In many states, homeowners must apply for a homestead exemption. This often involves filling out a form and providing proof of ownership and residency.

Philadelphia Home Exemption Program

The Homestead Exemption is a program offered by the City of Philadelphia to provide relief on Real Estate Taxes for homeowners. This initiative reduces the taxable portion of your property assessment by $80,000 starting in Tax Year 2023. In simpler terms, it lowers the amount of your property value that’s subject to taxes, potentially saving homeowners hundreds of dollars per year.

To qualify for the Homestead Exemption, you must be the owner and occupant of the property as your primary residence. There are no income restrictions or age requirements to apply, and it doesn’t matter how long you’ve owned your home. Both new and longtime homeowners across all neighborhoods can benefit from this program.

Once granted, the Homestead Exemption will automatically renew each year as long as you continue to occupy the property as your primary residence. If you move or sell your home, the exemption will not transfer to your new property; you will need to apply again.

Applications can be submitted online, by mail, or over the phone. The deadline for applications is typically in early December for the following tax year, but filers should file earlier. It’s important to note that the Homestead Exemption does not remove your responsibility to pay property taxes entirely but helps to reduce the overall burden.

Conclusion: Why Choose Innovative Mortgage Brokers

At Innovative Mortgage Brokers we don’t just offer mortgage solutions; we’re committed to educating and empowering our clients. Understanding the Homestead Exemption is merely one aspect of this complex journey, and we’re here to shed light on every facet of the process.

Our team comprises seasoned professionals who are equipped with the knowledge and expertise to guide you through each step of understanding different mortgage options. We believe in making the mortgage process less intimidating and more transparent, helping you make informed decisions that align with your financial goals.

Whether you’re stepping onto the property ladder for the first time or considering refinancing your current home, our team is dedicated to providing personalized services tailored to your unique needs. At Innovative Mortgage Brokers, we go beyond the transactional nature of mortgages, focusing on building lasting relationships with our clients.

Contact us today, and let us show you how we can make your journey towards homeownership a successful, enlightening, and empowering experience.