What is a homestead? Why is it important? The first question is fairly easy, although it can get complicated with enough lawyers in the room. A homestead is “the principal dwelling and parcel of land surrounding the dwelling, owned and occupied by a resident individual as the individual’s domicile.” There are rules and exceptions to that definition, but in most cases it is that simple.
The second question has two answers. The first focuses on asset protection, which was touched on in the April 2016 NEET Notes, “Prudent Asset Protection Steps Everyone Should Consider”. In short, some creditors are prohibited from taking your homestead from you even if the property is your only asset and you owe the creditor money. The second focuses on how your homestead impacts the education tax component of your property tax bill. Because the education component is usually far larger than the municipal component, it is important to understand the homestead laws and regulations.
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