The Ultimate Guide in Unlocking the Benefits of Homestead Exemption in 2023: Its Eligibility and Functionality
You’ve probably heard the term “homestead exemption” (or “homesteading”) but aren’t sure what it entails. Consequently, there may be some misunderstanding when we discuss homestead exemptions for houses. A home, or more precisely a farmhouse, is referred to as a “homestead,” and “homesteading” is described as “a lifestyle of self-sufficiency.” According to the homestead law, a person may designate a section of their primary dwelling (and only their primary residence) as a “homestead” to pay less in taxes. The first objective was to protect the family farm, house, or other assets in dire economic circumstances. See how it all ties together?
Homestead Exemption: Current Homestead Law
Homestead exemptions reduce taxes by excluding a portion of a home’s value from taxation. The owner will pay school taxes on a home valued at $100,000 as if it were only worth $75,000, for instance, if they are eligible for a $25,000 exemption (the level required by school districts). Additionally, it excludes that sum from most creditors’ reach and safeguards that worth from monetary calamities brought on by the demise of the homeowner’s spouse (to guarantee that the surviving spouse has shelter).
The only criterion for receiving a homestead exemption is that the property is the owner’s principal residence; farming is not required. This is the actual divergence between the homestead exemption and homesteading.
The Implications For HOA Collections
There needs to be more clarity surrounding homesteads, exemptions and homesteading. You consequently begin to ponder how the exemption might affect your community money or a potential collection effort at some time. What you need to know is this:
Condo associations and HOAs are still able to collect.
Fortunately, there are certain exceptions to the homestead exemption:
- The neighbourhood association where the property is located (you! ).
- Mortgage lenders.
- Taxing authorities (state and federal) all have the right to foreclose and collect if payments are missed.
Therefore, even if the homeowner has a homestead exemption, your community association is legally one of the only entities able to go through with foreclosure if one of your homeowners is behind on their assessment fees, all attempts to collect the debt have failed,, and the next step for your community is to foreclose.
Homesteading Is Not Necessary
Even though the terms “homestead,” “homestead exemption,” and “homesteading” all have a connection to farming in some way, to benefit from the homestead law, a homeowner need only be the owner of the property it is being applied to. They are not required to own a farm, produce, or any other traditional “homestead” good or service.
Despite this, homesteading has had a significant revival in the millennial age. To demonstrate that it is possible to successfully and beautifully live off of only what one can sustain and grow, thousands of influencers across social media document their zero-waste lifestyles using composting, indoor gardening, and reusable items (such as fabric grocery bags, beeswax wrappings, and mason jars). Some even manufacture their goods, such as all-natural candles or deodorants, to sell.
There is no homesteading hall pass under the homestead exemption.
Depending on the area and size of your community, you may be one of a few homesteading homeowners. Maybe they’re cultivating fresh habaneros and cilantro in their yard to make their salsa, or maybe they’re crocheting sweaters from thread spun from their pet cat Fluffy’s fur (yeah, that’s a real thing; in my opinion, it’s a really weird thing, but each to their own).
They must still abide by the community rules set forth by the HOA or condo organization, no matter what they are doing. Even if the community regulations conflict with a homeowner’s new homesteading lifestyle, a homestead exemption does not grant the person the authority to disregard them. More power to them if they want to keep chickens so they can have fresh eggs every morning and avoid having to go out and purchase eggs from the store, but they probably can’t do it in an HOA, and they most definitely can’t have hens in a condo building.
Closing a mortgage in a homestead state
Knowing that each state has a very different homestead exemption policy is crucial. Therefore, some HOAs or condo organizations can foreclose on a home with a homestead exemption. If it does occur in your neighbourhood, remember that even if a property has a homestead exemption, the community association has the right to foreclose and collect on it. However, working with a specialized collection agency will make the process go much more smoothly.
A specialized community association collection agency is what you need; they can deal with your owners to recover past-due sums with no expense or danger to the association. Contact us today.