What is Homestead?
What is Homestead?
Homestead refers to a person’s permanent home or property that includes the land on which the home stands on and other adjoining building or property. What qualifies as a homestead is the house in which the owner and his family live on. A home that is leased for other families does not qualify. Second homes also do not qualify as homesteads as these are considered temporary dwellings. Condominiums and mobile homes that rent out their land spaces can also be registered as homesteads. In the US, people register their homes and properties as homesteads to avail of tax benefits and for legal protection.
Based on the 1862 Homestead Act, the protection for homesteads or permanent dwellings was a welcomed by people with property. Each state in the US may have varying home protection laws and benefits for residents, but the whole concept of giving tax benefits and protection to the permanent home remains the same. Under the Homestead exemption law, US citizens with permanent homes can avail of property tax exemptions. This simply translates to lower taxes paid for homes and property. Some states also restrict the implementation of any increase on real estate taxes without any consultation from the public.
Through the homestead exemption, families are also given immunity from “forced sale” of their property to repay several debts. This gives protection to the property owner to keep his/her permanent home and avail of other options to repay certain debt. Most states have a maximum benefit limit on this protection feature. Protection limit values may differ if the property owner is single, married, or elderly. In cases wherein the debt of the property owner exceeds the maximum protection limit, he/she may still be forced to sell his/her home but with the assurance of receiving part of the proceeds or sale. And because of this homestead protection feature, in case the property owner dies, the law provides that the surviving spouse will get to keep the said property.