Because of the various state rules and regulations, we want to remind you that this post is not meant as a guide, but only as a reminder, if you are in the appropriate state, and in the appropriate situation, you may be able to Homestead your home, saving your property taxes (property tax exemption.)
If you hit up Homestead on your favorite search engine you’re likely going to get an article about moving to the country somewhere and building a log cabin home to retire.
That’s not what this is about.
We want to remind those especially that live in Texas who may have moved into a new home on last year on or before January 1st to be sure in Homestead their home in order to have a significant savings on your taxes.
Those living in other states should check their central appraisal district website to see the rules and regulations – this is likely a timely reminder as most just paid the property tax … or are about to pay them.
Not all states offer Homestead exemptions and many states do offer them but do no good because of the tax structure of their states, thereby making it important that you check each situation.
All of the above being said, using our home state of Texas as an example, there is a significant tax savings by homesteading your home.
From Wikipedia
In many states, including Texas once again, there are very special exemptions for those age 65 and it’s likely the January 1 residence date may not apply for those turning age 65. Special tax considerations are given for those 65 and older to school, property, other taxes with frequently freezes in escalations as part of the exemption … In order to qualify, you most likely will need to raise your hand (fill out another form) …notifying your taxing authority of your new tax saving age.
Property tax exemption
A homestead exemption is most often on only a fixed monetary amount, such as the first $50,000 of the assessed value. The remainder is taxed at the normal rate. A home valued at $150,000 would then be taxed on only $100,000 and a home valued at $75,000 would then be taxed on only $25,000.
The exemption is generally intended to turn the property tax into a progressive tax. In some places, the exemption is paid for with a local or state (or equivalent unit) sales tax.
Examples
- California exempts the first $7,000 of residential homestead from property taxes.
- Colorado allows a 50% deduction for up to the first $200,000 (equivalent to a $100,000 exemption if the property is valued at $200,000 or above) for seniors (over age 65) who have lived in their property for ten consecutive years.
- Georgia allows a 1% HEST only in a few counties.
- Florida‘s homestead exemption allows an exemption of 160 acres outside of a municipality and one-half an acre inside a municipality.[5]
- Kentucky, for 2019 and 2020, the exemption has been set at $39,300. Once it is approved, homeowners who are 65 or older do not need to reapply for the homestead exemption each year.[6]
- Louisiana exempts the first $7,500 of residential homestead from local property taxes.[7]
- Michigan exempts the homeowner from paying the operating millage of local school districts.
- Mississippi exemption from all ad valorem taxes assessed to property; this is limited to the first $7,500 of the assessed value or $300 of the actual exempted tax dollars.[8]
- New York‘s School Tax Relief (STAR) program exempts the first $30,000 of a primary home’s assessed value from school district taxes; the exemption is limited to owners with incomes under $500,000. Additional exemptions are available for people over 65 with a limited income. The STAR program applies only to school taxes; no homestead exemption exists for taxes levied by other municipal entities. New York prevents a New York resident claiming this exemption if the New York resident owns property in another state and claims a similar exemption in that other state.
- Oklahoma allows a $1000 deduction of the assessed valuation, about $75 to $125 of savings per year, if owners file for homestead exemption with the local county clerk.
- Rhode Island exempts the first 20% of the home value from property taxes.
- Texas allows a deduction, with additional exemptions available for county taxes, people over 65 and people who are disabled. It also requires school districts to offer a $25,000 exemption (but not other taxing districts, such as cities and counties).[9] Texas further limits the assessment increase on a homestead to 10% of the prior year’s value.
In most cases, there is a deadline for filing your Homestead Exemption, so do not dilly dally around or you may lose that tax savings at the end of this year or early 2024!
Just a friendly reminder to jog your memory, and maybe give you a nice tax savings!
Have a Great “Homesteaded Tax Savings” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
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Q2 2023 J.K. Financial, Inc. Newsletter … Tax Reminders – Still time for 2022 Savings … M2 Pilot Advanced Analysis Series Review … By John Kvale CFA, CFP …
Welcome to our Video and Audio Podcast Review of our Q2 2023 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.
Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page
BREAK IN : From Parting Thoughts in the Newsletter
If you are not receiving our street-cents.com blog posts weekly Monday, Wednesday and Fri-day, please reach out and let us know. We have entered the late cycle portion of this economic slowdown and items are moving much quicker than our quarterly newsletter so we are posting frequent and very important items amongst our sometimes-humorous articles for your review and knowledge.
Let’s get going! We hope you enjoy!
Q2 2023 Newsletter
(YouTube)
Last Minute Tax Planning and Reminders
After a small top of the mind reminder that it is ok to pay taxes, we do not want to pay zero today and then pay at a much higher rate in the future, we certainly do not want to pay ANY more than we have to, we go into several reminders….
The SEP and the Spousal IRA – two things we can do now that will help last years taxes….
Important Reminder about reporting :
Just because we did not receive a tax form personally, does not mean that the IRS did not receive some type of notification of that taxable event! If you had a transaction, usually of some out of the ordinary type, that you did not receive a tax form for, we are not out of the woods and you should report it.
Lastly, comments about the possible rolling of 529 into Roth… the answer is still up in the air with additional legal clarity on this… but it cannot start until 2024 anyway!
Happy Anniversary Rate Increases
While hard to believe, the monumental rate increases (fastest of a life time in %) just started about a year ago
M2 Broad Liquidity Measure Tightens
In another – not kidding here – never seen before, M2 one of the broadest measures of liquidity, turns negative and makes our Pilot Advanced Analysis Series…
First spoken about in January, the effects are being felt through the financial system.. but not where we had expected so far….
Have a Great Finally Here Spring! Talk in the Summer!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com
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Tagged Advanced Analysis, Interest Rates, M2, Newsletter, SEP, Spousal IRA, tax