Many states have homestead exemption laws, which permit homeowners to list a portion of their home as a "homestead" and thus make it off limits to creditors in the event of a bankruptcy. Ohio is one such state. FindLaw explores Ohio's homestead laws in brief.
Homestead laws vary drastically from state to state. For instance, Pennsylvania and New Jersey do not offer homestead exemptions while other states, such as Florida, Kansas, Iowa, Oklahoma, Texas and South Dakota, offer exemptions for up to 100 percent of the equity in a home. Ohio's homestead laws, while not nearly as generous as the latter states, are certainly more forgiving than Pennsylvania or New Jersey's laws, allowing homeowners to protect up to $25,000 of a person's property. However, if you count on claiming the homestead exemption in your bankruptcy case, you should know that Ohio's exemption only applies to property taxes.
Homestead laws exist to protect homeowners who find themselves in grim financial circumstances and even to prevent homelessness in more extreme circumstances. That said, individual states have the freedom to put limits on how much they want to help struggling homeowners. Typically, state laws aim to help struggling homeowners in one or more of the following ways.
- They allow a surviving spouse to keep the family home.
- They prevent the forced sale of a person's home to pay off creditors.
- They give homeowners immunities from property taxes attached to the home.
Per all state laws, homestead exemptions only apply to a person's primary residence. Vacation homes or second houses do not qualify for these exclusions.
Ohio's homestead laws only allow homeowners to claim up to $25,000 in property taxes. For example, if you have $100,000 of equity in your home, you may subtract up to $25,000, which means you would only have to pay property taxes on a home valued at $75,000. This would equate to a savings of approximately $400 each year.
The content shared in this post is for educational purposes only. It should not be construed as legal advice.