Homestead exemption

Discussion in 'Homesteading Questions' started by sullen, Apr 12, 2005.

  1. sullen

    sullen Question Answerer

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    I applied for a (and got) Homestead Exemption, but my neighbor is afraid to because he thinks the town will be able to come in his house and re evaluate it. He is not paying anywhere near what his house is worth, and he likes it that way. Has this happened to anyone?
    I don't want anyone inside my house, sticking their nose in, but then my house isn't worth much. (yet)
    Thanks
     
  2. rambler

    rambler Well-Known Member Supporter

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    Here in Minnesota they come & inspect all buildings, including house, every 3 years. What is normally done 'there'?

    --->Paul
     

  3. Blu3duk

    Blu3duk Well-Known Member

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    The Homestead Exemption is protection for the family should someone try to sell your homesteaded property after declaration is made. By State Law maximum limits are set as to what can be held for such exemption, such as Idaho is now up to $50,000.00.

    The kicker is that a person assesses thier own property and places a value on it, outside any liens already recorded upon the property, so if a person owes 50,000.00 but the property is worth market value of $80,000.00 according to Idaho law the homestead exemption of $50,000.00 applies, after covering the first mortgage, or a person can claim a homestead value of $30,000.00 and adjusst such value yearly as the principle loan amount dwindles.....

    That said I made my Declaration ab intio and went in front of my loan for $40,000.00 [which was maximum allowed at that time] so to be protected from a forclosure, of which is now in front of the court to declare my declaration was proper.... time will tell.

    Mostly the exemption is to keep the creditors such as a hospital that runs up a huge bill for an infirmed person fom selling the property at sheriff sale and that person left holding the original note withnothing to pay it with.

    As for the asessor re-evalueating the property because of it, its a coin toss, if the sale price was recorded, and you record a higher valueation of exemption according to law they may just over look it because it is within the legal right of an owner to record such exemption, it just isnt for valuation purposes.

    look for your state codes at Cornell Law Library under Law by Source or Jurisdiction then search your state for the part in the table of contents referencing either realestate and homestead laws in particular. And while it cannot give you the advice you are after it will help in making out your paperwork to record the homestead exemption or Declaration of Homestead, and show what the proceedurre is to take away a persons homestead rights.

    Hope i aint to far over anyones head, the laws of most states are written simple so edumacated laywers can read them ya know.
    William
     
  4. sullen

    sullen Question Answerer

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    I have sooo no idea what you are talking about, Blu. I only applied to get a tax break, the town here seems to want all my money. I only had to submit a paper, and they approved it. I guess I will wait and see what happens.
     
  5. Blu3duk

    Blu3duk Well-Known Member

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    Declaration of homestead stems from the original homestead act of 1811, revised over the years, to make a uniform law that gives land holders certain rights to be secure from certain things a declaration must be recorded from time to time, this varies greatly still bewtween states under the homestead laws of those states [see original post for link to cornell law library for your particular state laws link]

    Recording a Declaration of homestead will provide certain protections, say from an accident you are involved in and the other guy gets a lawyer who attaches your property you live on, they cant sell it for a dollar and take it away from you, if you have it with no loans on it, this provides up to $50,000.00 in most jurisdictions of such protection, and they cannot get at that $50,000.00 until 6 months have passed in Idaho at least, so you can get on down the trail and reinvest in another property so they cant get all of it at once anyhow.

    i believe what you are typing about may be similar to a rural tax break here for acreages that are used for timber growth, whereby the owner does not pay taxes until the harvest of timber or until the property changes owners. We dont get tax breaks for much of anything here, the taxes [state rent] is pretty low for the most part.

    I gueess what i think is pretty simple can get complicated in a hurry for some people, the lawball game is fun, can cost a person some time, my baptism under fire cost me about 3 years before i got tired of playing in the court, but the education was well worth the time and has served well these past 15 years for myself and others who found themself in a bind a time or three.

    William
     
  6. Ann-NWIowa

    Ann-NWIowa Well-Known Member Supporter

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    I think homestead exemption in the context of this question is simply a tax break you get for living on the property as your home. As far as the assessment goes its really apples and oranges. In other words one has nothing to do with the other. You get the tax relief because you live in the house you own or are buying period. That is the only qualification.

    Property is regularly re-assessed so they can raise your taxes. The application for homestead exemption will not trigger an assessment. The county/state wanting more tax dollars will trigger the assessment. Around here if a "similiar" property sells for $100,000 then your property value will rise to $100,000. Even if you haven't improved the property and realistically it would only sell for $40,000. On the other hand, I've never heard of them lowering the assessment if a "similiar" house sells for $20,000!! Lower and taxes in the same sentence is an oxymoron.
     
  7. Beeman

    Beeman Well-Known Member

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    You've agreed to dance with the devil and he now gets to call the tune. Are you really saving enough to make it all worthwihile? Only time will tell.
     
  8. jillianjiggs

    jillianjiggs Well-Known Member

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    I wouldn't file an exemption unless you KNOW you need it. For example, if you were filing for bankruptcy. It's a double edged sword. It's great protection, but once you file, it's a HUGE negative to anyone that might provide financing for you. It'll raise a red flag that you might be getting ready to file bankruptcy, have serious debt, etc.
     
  9. melinda

    melinda Well-Known Member

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    The "homestead exemption" you are referring to is exactly what Ann-NWIowa described - an amount set by your state is deducted from the assessed value of your home, so your property taxes are lower. If your assessment is $50,000 and the homestead exemption is $5,000, you only pay taxes on ($50,000 - $5,000) = $45,000. You probably won't get an appraisal until it's time for re-assessing values, which may not happen every year. When your assessed value rises, say to $53,000, your homestead exemption still lowers the taxable value by $5,000 (or whatever the homestead exemption is in your state). It only applies to the property where you actually live, not other properties you own.

    No dancing with the devil, just some math.