WEBlue

Great interest rate! We're shopping for a mortgage for the house we want to buy, and we're loving the interest numbers. (Wish our house price was as reasonable as yours though! )

Was the homesteader exemption easy to sign up for? It's been recommended to us too.

Oops, almost forgot the ... Congratulations!!!

Michael

Usually it is as simple as declaring that the home is your primary residence. If you rent it out, you have to declare that it is no longer your primary residence.

WEBlue

Ah, interesting. So that's the drawback.

The house we're bidding on is in a coastal town, so we have thought a bit about renting it out in the summer...say if we're travelling.

So we would have to notify the Town Hall (think that's where we need to get the homestead form?) that the house is no longer our primary residence if we decide to rent it out for the summer ... or even for a short time like just a month?

Michael

Usually for a month or two, it probably isn't going to matter since it is still your primary residence. I suspect you will signup or automatically given homestead during closing. Since homestead normally lasts for the year, in California they send a homestead form with the property tax bill that you must fill out declaring that the property is not homesteaded if you are not currently living in the home. Other than that, nothing has to be done.

WEBlue

Thanks much for your helpful input, Michael!

Michael

Homesteading provides two things. First is a reduction in taxes and secondly it protects up to a certain equity in your home from third party claims (not mortgage loans) if you file for bankruptcy. The reduction in appraised value for property tax purposes is not the same as the protection value.

For example, in Florida, homestead protection for primary residence homes is unlimited (creditors cannot force the sale of the home of any value) but other states only protect a small amount. Therefore people like OJ Simpson moved to Florida and put his money into his home to protect against that multimillion dollar wrongful death lawsuit and then draws on the equity (HELOC) to pay bills. Florida also allows you to sell the home and place the money in a separate account for the purpose of purchasing a new home and the money is still protected. About the only ones that can force a sale in Florida is the mortgage company for foreclosure, tax authorities for unpaid taxes, and unpaid lien holders that permanently upgraded a home. All other liens or lawsuits that have nothing to do with permanent fixtures in the home cannot force the sale.

RICH

It is probably different State to State. Here in Florida, I had to apply (online) before March, for the following year. The current year taxes were due pro rata on the previous owners basis. Also the taxable/appraised value re-set based on the sale price.

The exemption here is on the first 25k not 70k.