The homestead exemption is intended to safeguard a person’s primary residence from creditors after they declare bankruptcy or upon the death of a homeowner’s spouse. It can also reduce property taxes by lowering your state property tax obligations.

A homestead is a dwelling that a person uses as their primary residence, whether it is a single-family home, farm home, condo, or mobile home. Your vacation home, condo, or apartment, where you spend weekends or other shorter periods, would not qualify as a homestead.

What is a homestead exemption?

A homestead exemption is a protected amount of your home’s value.  It depends on the amount of equity you have in your home, minus any liens or encumbrances. According to New York homestead protection law, the homestead exemption amount ranges from $82,775 to $165,550, depending on the county. If you are married, the homestead exemption is doubled.

If your home equity (minus any liens or encumbrances) exceeds the homestead exemption amount for your county, the court may order you to sell your home and pay the difference between the equity in your home and the amount protected by the homestead exemption.

The homestead exemption does not apply to mortgage foreclosure actions, home equity lines of credit, actions that use your home as collateral for a debt, or to satisfy non-payment of a tax debt.

Following a homeowner’s death, surviving spouses have the right to live on the homestead property for the rest of their lives.

Does the homestead exemption apply to nursing homes?

Nursing homes cannot garnish Social Security and pension income to satisfy nursing home debts. Often, the only asset they have access to in order to pay off a nursing home debt is a person’s home. Homestead exemptions can significantly impact a nursing home’s ability to collect on judgments made to satisfy a debt to the nursing home.

What happens if you file for bankruptcy?

If you file for bankruptcy, you must choose between the New York homestead exemption or the federal bankruptcy protection. The federal bankruptcy protection program provides a lower level of protection. If your bankruptcy was filed after April 1, 2019, federal bankruptcy law will shield your home from a forced sale in bankruptcy as long as your home equity does not exceed $25,150.

New York does not have a residency requirement. This means that as long as your primary residence is located in New York at the time you file for exemption, you are eligible for the full amount available under the New York homestead exemption.

What is the homestead tax exemption?

The homestead exemption also reduces property taxes by lowering the taxable value of your primary residence.

The homestead tax exemption is the dollar amount or percentage of property value that is excluded when your property taxes are calculated. The amount each homeowner is entitled to exclude when calculating their property taxes varies by state. In some states, every homeowner is eligible for the exact same exemption. Other states factor in your income level, age, property value, and veteran and disability status.

New York offers a variety of exemptions. Seniors, veterans, people who have disabilities, and people who own agricultural properties can qualify for exemptions. The School Tax Relief (STAR) credit is also available for anyone who earns less than $500,000.

If you own a home, condo, farm home, or mobile home in New York, you are eligible to protect your equity in your primary residence under the New York homestead exemption. This law is intended to protect your primary home from seizure by a court order to fulfill a debt, whether you have filed for bankruptcy or not. Some states require an online application to qualify for the homestead exemption.

Contact us if you need financial advice or want to create a comprehensive estate plan to protect your property and accounts. Hiring a local estate planning attorney in New York City ensures that your plan aligns with specific state laws, giving you the best protection for your assets.