File a Declaration of Homestead

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Although the cash value of homestead exemptions does vary, in most areas it's periodically adjusted upward to keep pace with inflation. Therefore, it pays homeowners to keep pressuring their legislators to increase these exemptions as the price of real estate rises.

Fortunately, homestead laws are usually—in legal terms—"liberally construed". An apartment (if you own it), a mansion, a cabin, or a tent can qualify as a homestead . . . provided the dwelling is the "bona fide residence of the claimant". If you haven't built a house yet, you might still be able to "homestead" your future homesite: In one case, a 161-acre parcel in Texas was judged to be a homestead because the bankrupt owner had shown intent to build by drilling two wells and planting fruit trees. (I can only assume that the landowner was camping out on the property to meet the residen cy requirements.) A family is allowed only one homestead, though, and must "show good faith in their claim". Summer vacation cabins, for example, on which declarations have been filed and accepted, have been taken away for debt payment.

Outbuildings and land that are used by the family for enjoyment or livelihood are generally considered part of the homestead. But adjacent lots-or parcels next to a home that are held for idle investment purposes—might not qualify, unless they're gardened, logged, or farmed.

Generally speaking, homestead exemptions apply only to married couples and their families. (Some states do have a "head-of-household" exemption that covers two or more people living as a family unit, provided one person supports the other members of the group.) Should one spouse die, the survivor and any children are protected under the exemption until the survivor dies and the youngest child is of age. And, naturally, the exemption terminates if you sell the property. Claims can be filed on successive dwelling places, but only on one site at a time.

Some states—Alabama, Arkansas, California, Florida, Georgia, Iowa, Louisiana, Minnesota, Mississippi, Missouri, Oklahoma, South Dakota, Texas, West Virginia, and Wyoming—even permit a tax credit for homestead property. In these states owners are allowed to deduct some set amount from their yearly property tax assessments.

If you're among those folks lucky enough to live in a state that recognizes the Declaration of Homestead, you'd be wise to get in touch with your county clerk or recorder right away for complete information about the procedure. Filing the document is well worth the few dollars and the little time it requires. It's a simple step that could save you money .. . and it just might even save your home!

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