When I hear the word, Homestead, I think of early settlers running across the Midwest plains on foot, on a horse, or by wagon, looking for a plot of land to stake and claim as their own, as a gift from the government at that time. A total of 10% of U.S. land was snatched up by and given to, our predecessors. Free land to expand the Land of Freedom. An opportunity for those who could never outbid wealthy landowners from the South. Plantation owners eager to gobble up the virgin land of the West. What an adventure to live during those times! Claiming free land and cultivating it into a home and livelihood for generations to come. (A humble heart acknowledges the loss and suffering of the First Nations who were pushed out to accommodate the expansion of the settlers. We honor you.)
SECURING A FUTURE
The days of homesteading are a distant memory. No more land is available on the mainland (though I hear Alaska still has some!). Even so, wouldn’t it be nice to know that the property we own now is secure and available to pass down to the next generation? Such security is not guaranteed anymore, yet several states now have Homestead Laws to help protect and alleviate the stress of taxes on one’s primary residence.
When I lived in the mountains of Colorado, I met many families living in at a poverty level, yet had homes and land passed down through the generations. However, as property taxes started to rise with the influx of an affluent population looking for vacation or retirement homes, their once secure lands were being threatened. Property values skyrocketed and I watched as several families lost their family homes and land because they could no longer afford the taxes that were assessed.
In 2000, the state of Colorado passed a Homestead Law that, while not perfect or ideal, gives seniors a break on their primary residence. Additionally, families going through a Bankruptcy may receive protection on a primary residence. In effect, it protects the value of the home or residents from property taxes, creditors, and circumstances arising from the death or debt of the homeowner.
The Colorado Homestead Law:
- Prevents a forced sale of a home to meet demands of creditors.
- Provides a surviving spouse with shelter.
- Provides an exemption from property taxes.
- Applies to one primary residence.
PROTECTION FROM CREDITORS
The Homestead Law allows one to exempt up to $60,000 of their home value when filing bankruptcy. With equity greater than the exemption, the difference is subject to a legal claim from creditors.
Let’s consider a home worth $200,000 with a mortgage balance of $130,000. This property has an equity value of $70,000. Assuming a sale at the full market value of $200,000, the owners receive their $60,000 exemption. The balance belongs to creditors. However, in the case of only $40,000 equity in a home, the home is under the protection of the Homestead Exemption. Safe from any actions from creditors, the owners retain the right to their primary residence.
Citizens over 60 or with a disability receive an exemption of $90,000.
If you need more info or protection from creditors, please contact a local Bankruptcy Law attorney for clarification. Including all pertinent laws and protection for your situation.
HOMESTEAD EXEMPTION FOR SENIORS
In order to protect the elderly who have invested in their primary home, a tax exemption is available. Senior citizens receive a significant reduction in their property tax value. Property owners over 65, or their surviving spouse, qualify to receive a 50% deduction for the first $200,000 in value of their primary residence. This means a home worth $250,000, receives a $100,000 deduction resulting in the property assessment based on $150,000 value. Subsequently, a home worth $150,000, receives a $75,000 exemption, leaving a property value of $75,000.
- Must be 65 years old on January 1 of the year they apply for the exemption.
- A surviving spouse of a qualifying owner.
- One must be the owner of record for property in question for 10 consecutive years.
- Must be the primary residence of the owner on record for 10 consecutive years.
- The property is classified as residential.
- Legal address for the property is listed on your voter registration or other official documents.
- For seniors that own a mulitple dwelling unit, only the unit occupied by the applicant is used for the exemption.
- Can only apply on one property.
- To receive the exemption, you must apply with your county assessor.
- Only need to apply once.
The filing deadline is July 15. For instructions and the forms to file for your Homestead Exemption are located here:
DISABLED VETERAN EXEMPTION
Disabled veterans are included in the tax break on their primary residence. The extra benefit that they receive is that they do not have to be 65. Also, they do not have to occupy their home for 10 consecutive years. Instead, a qualified veteran includes one who has:
- A 100 percent permanent and total disability rating from the US Dept. of Veterans Affairs.
- The disability is a service-related disability.
- Have occupied the home since January 1 of the year the application is submitted.
If you are a disabled veteran, first let me thank you for your service and your sacrifice! I have a special place in my heart for the military and disabled veterans. We are a military family as well. Secondly, the forms to apply for your Homestead Exemption are located here:
A FINAL NOTE
The Homestead / Property Tax Exemption is for one individual or a married couple. Whether a senior citizen or disabled veteran. And only for one property. If an individual or a married couple applies for an exemption on more than one property (or two individuals for one property) the exemptions will be denied on every property.
I hope you found this information helpful. Please pass it on to the senior citizens or disabled veterans that you personally know. Many of them are not aware of this benefit available to them, or they have forgotten about it. Individuals on a low or fixed-income appreciate every dollar they can save in their budget!