This question sometimes comes up as we are searching for homes. There is a gross tax and a net tax listed on the MLS sheet. Sometimes the two numbers are the same, sometimes the net is less and sometimes, the net is significantly less.
What is the Homestead Tax Exemption?
The homestead tax exemption is the credit that a homeowner receives on their yearly taxes for their primary residence only.
At the closing table, the lender will mention to you that this exemption must be done prior to June 30th of the year. The tax escrow is based on the homeowner claiming this credit. If the credit is not claimed by that date, the taxes will go up to the gross value for one year, therefore your payment will go up to cover that cost.
So, when you see that the gross and net taxes are the same on the MLS sheet, one of two things has happened.
Either it is an investment property and NOT a primary residence
It is a homeowner that never claimed their homestead tax credit.
You will notice that in most cases the net taxes is a little over $110 less than the gross taxes. This is the normal credit for a primary residence.
If the value is several hundred dollars lower, there may be a military or senior citizen credit, sometimes both. Usually this is disclosed somewhere on the MLS sheet.
The homestead tax credit is one of the many benefits of owning your home. If you forget to file for the credit, I will remind you in the last month. It is a simple process. Only one homeowner needs to go to the county tax assessor and sign a simple form. It only needs to be completed once during your home ownership. If you are a veteran, you will need to provide proof of your military status as well.
Thank you for reading and please let me know if you need any assistance in understanding the benefits of buying a home in the Cedar Rapids area.