What Constitutes Homesteading?
Converting a property into a home provides the foundation for homesteading. When the owner of a house, mobile home, condominium or purchased apartment makes the location his primary residence, the property becomes eligible for homestead status. Along with the pride of ownership and financial protection, homesteaders also receive tax credits in some states. An annual deduction applied to the assessed property value creates incentive for residents to maintain the property and their homeownership status.
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Procedure
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Filing for homestead requires few forms, a nominal fee and very little time, according to author Bill Wauters in his article "File a Declaration of Homestead," on the Mother Earth News Guide to Living Wisely website. Office supply stores or a county recorder's office offer basic homesteading forms. While the forms are being completed, a notary needs to witness the proceedings and validate the document. Many recorder's offices employ staff with notary credentials to expedite the homestead filing process.
Features
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Filing a homestead declaration form entitles the homeowner to protection of his investment in the event of financial hardships. After the sale of the home, the property owner may keep the state regulated homestead exemption value. Only the remaining balance would go toward repayment of debt. Individual participating states implement and regulate homestead rules. Laws change frequently, so check with local county or city government for the most current homesteading laws and values.
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Rules
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A family may claim homestead on one property at a time. Since the property owner must inhabit the property, an individual cannot claim two separate properties as a primary residence. The homestead exception terminates after the sale of the property. The new owners must file their own homestead declaration and the previous owner must file a new homestead declaration for his new residence.
Warnings
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A declaration of homestead form will not protect a home if the property served as collateral for a loan, is subject to mechanics liens or has unpaid property taxes. After selling the home, the full sale amount transfers to the creditors to pay down debt. The seller retains any remaining funds.
History
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Approved by President Abraham Lincoln, the original Homestead Act took effect on Jan. 1, 1863. The initial goals of the legislation included expansion of the West, offering opportunities to settlers and populating rural areas. The first homesteaders assumed homeownership by promising to live on 160 acres of undeveloped land for a minimum of five years, pay an $18 fee, develop the land by building a home and farm the land. A homesteader could buy the 160-acre parcel for a mere $1.25 per acre after living on the land for six months. Daniel Freeman claimed the first homestead near Beatrice, Nebraska in 1863.
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References
- Photo Credit house image by Cora Reed from Fotolia.com
