Homestead exemption
A state law that reduces property taxes on a primary residence, or protects some equity from creditors. Rules and amounts vary a lot by state.
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Where this comes up: getting ready
Part 1 of 4
Why a seller cares
The exemption lowers the tax bill on the home you live in, and it ends when you sell. The buyer applies for their own; the proration at closing usually uses the bill as it stands, exemption included.
Part 2 of 4
A simple example
Your taxes are $3,200 a year with the homestead exemption and would be $4,100 without it. The buyer's lender estimates their escrow at the higher figure.
| The moment | What the exemption does |
|---|---|
| While you own and live there | Lowers your bill |
| At closing | The proration usually follows the current bill |
| After the sale | The buyer files for their own; until then the county bills the full amount |
The exemption is yours, not the house's. It leaves with you.
Part 3 of 4
What people get wrong
That the buyer inherits your exemption. They apply for their own, and a listing that quotes your exempt tax bill can surprise them.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines homestead exemption in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
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