Farmstead and Homestead Exclusions are a wonderful thing; if you understand the process. I didn’t when I bought my house last year. From talking to county assessors across the Commonwealth, I think it is safe to say that a lot of REALTORS® don’t understand exclusions either.
So, what is it?
Homestead and farmstead exclusions give property tax relief to homeowners who have their permanent residences in the taxing jurisdiction by excluding a part of the assessment from taxation. All taxing authorities (i.e. county, municipality and school district) may offer the exclusions, but most counties and municipalities don’t. School districts, on the other hand, do offer the exclusion since it is mandatory when receiving state gaming funds.
So, how does it work?
- A homeowner must apply and qualify for the homestead exclusion. To qualify, the homeowner should apply for the residence they call “home.” I should mention that you can’t have multiple qualified residences. After you qualify for the homestead exclusion, you can apply for the farmstead exclusion (if applicable), which includes all buildings and structures on a farm of 10 or more acres and used primarily for farming.
- Exclusions are good for at least three years. Exclusions aren’t transferable to a new homeowner, nor can a homeowner “take it with them” when they move. In other words, exclusions are only valid when the applicant is still living in the home that the exclusion was filed for.
I think it’s better safe than sorry and advise your client to contact the assessment office directly and be prepared to fill out an application. I received a letter from my county assessment office earlier this month that included the application. It took about five minutes to fill out and I already received approval. If you don’t receive a letter, call the assessment office or check to see if there is an online form.