Homestead exemption

A homestead exemption is a state-level reduction in property tax for primary residences. The mechanism varies by state, some reduce the assessed value before tax is calculated (a $25,000 reduction means tax is computed on assessed value minus $25,000), others apply percentage reductions, and a few cap how much the assessed value can grow year over year for primary residences. The savings can range from a few hundred to several thousand dollars per year.

How it works: most homestead exemptions require a written application filed with the county tax assessor. Deadlines vary, some states require filing in the first 30–90 days of ownership, others by an annual deadline like March 1 or April 1. The application typically requires proof that the property is the primary residence (driver's license at the address, voter registration, vehicle registration, utility bills) and confirmation that the buyer doesn't claim a homestead on any other property.

Why it matters: the savings recur every year for as long as the home is the primary residence. Missing the application is a small mistake that compounds. The homestead exemption is also one of the easier post-closing wins for new homeowners, with the application typically being a short form filed for free with the county.

Common gotcha: California's Proposition 13 caps annual reassessment at 2% for primary residences but resets to current market value at purchase, so new buyers don't immediately benefit from the cap (it accrues over time). Florida's Save Our Homes works similarly. Other states (Texas, Michigan, Massachusetts, Georgia) have their own structures. The county assessor's website is the authoritative source for the specific state's rules and filing requirements.