Homestead laws are meant for protection of homes of small property owners from creditors and property taxes. Such protective measures are there in many state laws and in constitutional provisions of some of the states.
Under the scheme of the homestead laws one and only the primary residence of a person may qualify for exemption. No further exemption can be claimed in respect of any other property of the concerned person even if located outside that particular state or jurisdiction.
Though in some states homestead protection is automatic, yet in many others the homeowner must file an exemption claim with the authorities for such benefit. However, when the homeowner shifts his primary residence elsewhere from the protected property, the protection will be lost.
Homestead exemption laws prohibit the forced sale of a home to satisfy the demands of the creditors. In the event of death of one spouse, the surviving spouse is entitled to shelter under the homestead laws. These laws also provide exemption from property taxes.
Different states provide varying levels of protection under the homestead exemption laws. Some jurisdictions have ceilings in terms of dollar value of the property. When homes with higher values are put to sale at the instance of the creditor, the homeowner is entitled to a part of the proceeds of sale. Others have fixed maximum permissible area limit for a homestead for protection, Again even on the parameter of area there is higher threshold for rural homestead than urban homestead.
A homestead enjoys exemption from property tax only up to a fixed monetary amount of the assessed value and not beyond.
