What Are Homestead Taxes?

The homestead tax credit is an option some taxpayers have to save on their state and local property taxes. This option is available at the state level, and not all states have enacted homestead laws. While the general terms of these laws are similar, the qualifications and coverage vary.

Coverage

This real estate tax saver also protects homeowners from losing their homes to creditors, with the exception of mortgages, mechanics liens and to pay real estate taxes. It also provides shelter protection to a living spouse.

Qualifications

Typically the property in question must be the primary residence of the owner. Property owners may also be required to apply for the right to take this tax credit and to have been a resident of that state for a minimum period of time.

Where to Apply

Check with your state's assessments and tax agency. A list of states and general provisions can be found at Homestead Exemptions and Forms; follow the link in the Resources section.

IRS

The IRS requires a designation of homestead status as part of Form 8898.

Credit

This personal property tax credit is covered as a tax deduction on the state tax return.

References

• IRS: Homestead Tax

Resources

• US Legal: Homestead Exemption Laws