What Happens to My Homestead Exemption if I'm Not on a Loan?

The homestead exemption is state law, not federal, and each state has variables established by the legislature. You can claim a mobile or modular home, condominium or single-family dwelling as your homestead in most states. States usually require that you reside in the home by the first of the year and must file the declaration with the county before April 30. File the homestead declaration form with your county clerk, county recorder or assessor’s office to declare the property your homestead -- that it is your primary residence and that you own it. Once you declare the property as your homestead, you may qualify for a homestead exemption.

States base ownership for homestead exemptions on conveyance documents that convey the property to you. If you’re not named on the loan, you can still claim the homestead exemption if the conveyance document, usually a deed or title, has your name on it. If you sell the house, condo or modular home, you won’t be able to declare it as a homestead. Most states won’t allow a homestead exemption if the residence is in the name of a corporation or a business. You don’t have to own the land to claim a homestead exemption in some circumstances. For example, you can obtain a homestead exemption for a modular home without land ownership. You’re only required to own the modular home and use it as your primary residence.

You’ll need proof of ownership of the residence and proof of permanent residence in the state to file for a homestead exemption in most states. The deed or conveyance document and your state driver’s license or ID card should be all you need for proof. If you or your spouse claims a homestead exemption in any other location, you may not qualify for another homestead exemption until you surrender the previous exemption. You’ll need your spouse’s Social Security number, even if your spouse isn’t filing for a homestead exemption with you. Most states don’t allow a married couple to claim separate residences for homestead declarations.

A homestead exemption gives you two protections -- a reduction in property taxes and protection from general creditors. State legislatures enact the acceptable tax reduction for the homestead, and that amount might change depending on the state's financial condition. Your homestead protection from creditors doesn’t shelter the owner from the mortgage and debts incurred for homestead improvements. The company that provides mortgage financing can file a lien against the homestead if you don’t make payments. You don’t get a reprieve from tax debts with the homestead exemption either. You are protected from forced sale of the home if you have outstanding debt unrelated to the home or tax liability.