The Homeowner’s Exemption vs. The Homestead Exemption
WHAT’S THE DIFFERENCE? Dealing with important paperwork for your home and estate plan can feel like wading through alphabet
imagine you’re
involved in a car accident, and your insurance isn’t enough to cover the judgment
soup. So many forms have similar names that it seems impossible to tell them apart! Two of the worst offenders in this category are the California Homeowner’s Exemption and the California Homestead Exemption. Their names are almost identical, but they have very different functions. We put together this quick guide to help you understand the difference.
against you. When the other driver puts a lien on your home and forces you to sell, the Homestead Exemption kicks in and ensures that you still have money in the bank.
How much money? Well, that depends on the median home price in the county where you live. As of 2023, all Californians are guaranteed at least $339,000, but if you live in a county with higher home prices, the Homestead Exemption could protect as much as $678,000 of your equity. Claiming the protection of the Homestead Exemption is easy — you already have it! It’s automatically applied to every primary residence in California. There’s no paperwork to file or office to call. If you live in the Golden State, you’re protected. A Quick Recap The Homeowner’s Exemption is a property tax reduction, and to get it, you need to file an exemption claim form with your county assessor. You should contact the county assessor’s office if you have questions about the Homeowner’s Exemption. In contrast, the Homestead Exemption is a protective measure that safeguards some of the equity in your home from creditors. There’s no need to take action to get this exemption. As a California resident, you have it automatically.
The Homeowner’s Exemption The Homeowner’s Exemption is a property tax reduction on your primary residence. If you claim the exemption, the county assessor will reduce the taxable value of your property by $7,000. This means you’ll save about $70 per year in property taxes! To get this exemption, you must fill out the exemption claim form (Form BOE-266) and turn it in to your county assessor’s office. The good news is that you’ve likely already done this, even if you don’t remember it. When you move into a new home, the county assessor automatically mails you the exemption claim form. That means you probably completed and filed it during the closing process or shortly afterward. If you’re unsure whether you’ve filed your exemption claim form, check your property tax bill. You should see the $70 deduction there. If you don’t see the deduction, contact your county assessor’s office. They can confirm whether your exemption claim form is on file, send you a copy of the form if needed, and answer any other questions you might have. The Homestead Exemption The Homestead Exemption makes sure you won’t be left penniless if creditors come after your home to settle a debt. For example,
Hopefully, this guide helped you make sense of the alphabet soup!
–Jennifer Knight
2 PrestonEstatePlanning.com
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