Homestead Exemptions to Property Tax

According to the Wikipedia entry for Homestead Exemption,

Homestead exemption laws typically have three primary features:

1. They prevent the forced sale of a home to meet the demands of creditors;
2. They provide the surviving spouse with shelter;
3. They provide an exemption from property taxes which can be applied to a home.

Homestead exemptions for property taxes often mean that a fixed dollar amount of a primary residence's value isn't taxed. So, for instance, if there is a $100,000 homestead exemption, a $300,000 home would be taxed on $200,000, where as a $150,000 house would be taxed on $50,000.

In states with Homestead exemptions, sometimes the exemption is applied automatically, and sometimes it has to be applied for, particularly in those states where the exemption only applies to a certain portion of the population, such as seniors.

The idea of providing such an exemption to seniors is appealing; it can solve the problem of ejecting those who have been long term residents from lifelong homes. However, the void of payment generally has to come from somewhere. Often, municipalities that have a homestead exemption make up for it with a sales tax (sometimes known as 'HEST' - homestead exemption sales tax). In some states, this is applied to necessities such as food, clothing, etc. - which means that the populations who don't own property end up subsidizing those who do (and in locations without qualifying factors for homestead exemption, it can mean that the richest benefit and the poorest lose out).