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State law usually defines the extent of the homestead exemption. Whenever you buy a home you’ll want to know if there is a homestead-exemption available to you in your state of residence.

The first thing to understand about a homestead-exemption is that it is only available on one home, your legal residence where you actually live. You cannot get a homestead exemption on rental property you may also own, even if those homes are located in the same state where you live.

This concept was developed when the United States was primarily agricultural and people were living on farms or acreage that they needed to protect in order to make their living as farmers or ranchers. But home owners in urban areas enjoy the same benefits as well. People who are renting a home cannot benefit from this type of exemption.

Now, you may be wondering, what exactly are you “exempted” from when you acquire a homestead-exemption? It sounds like a good thing, but what does it really do for you? The answer to that question depends on where you live. Forty-six states in the United States have benefit; the states having no homestead exemption are Delaware, New Jersey, Pennsylvania and Rhode Island. If you live in one of those four states then you do not have the protection on your home that I am describing in this article.

For people who own their home and who live in the forty-six states that offer a homestead-exemption, the benefit varies state-by-state. I suggest that you get online and research everything pertaining to this matter for your state of residence so that you know the legal facts, but basically what a homestead exemption will do for you is two specific things:

1) Reduces your property taxes by a certain percentage of property value. The exact percentage will vary with each state, but one thing to remember is that the reduction is not automatically deducted from your tax bill. You must apply for a benefit in your county of residence to benefit from the tax savings.

2) Protects your property from liens and seizure by certain creditors, although this protection does not apply to your mortgage lender or to workmen who perform services or labor on your property. Federal, state and county taxing authorities also have the ability to place a lien on your property if taxes are delinquent. But, in most states your homestead exemption shields you from creditors placing a lien or seizing your property for other debts such as business or credit card debt.

The subject of a homestead exemption is complicated by the variety of different laws in different states, but the main points to remember are to be sure and find out what is available in your state, how it protects you, and that you must apply for this benefit in the county where you reside.