What is a homestead exemption?

Property taxes are a required cost of owning a home, but 46 states in the U.S. offer a homestead exemption that can help lower the tax burden if it is a primary residence, according to SmartAsset. There can be an upper limit on the value of a home that qualifies, and there might also be more substantial exemptions available for those with low incomes, seniors, and the disabled. Once qualified, there will be either a percentage discount on property taxes or a flat dollar amount deducted from the bill. As an example, someone who owns a home with an assessed value of $200,000 living in a state with a one percent property tax would typically owe $2,000 each year. With a $50,000 homestead exemption, however, they would only owe taxes on $150,000 of the value, reducing the tax bill to just $1,500.