Pennsylvania Homestead Exclusion & PA Farmstead Exclusion
Published: July 6, 2017
Part of our Real Estate Law Series
There is a little known exception waiting for Pennsylvania residents who own consider their home in PA a primary residence It’s the Pennsylvania Homestead Exclusion & PA Farmstead Exclusion. How it works: most owner occupied homes and farms are eligible for property tax reduction through this program. In order to benefit, you must simply apply. A little background about homestead exclusions and farmstead exclusions.
Pennsylvania Homestead Exclusion
Homestead is real estate occupied by a person as his or her home or dwelling place. They are often a house, especially a farmhouse and outbuildings. It’s also a person’s or family’s residence. This includes land + home + outbuilding. In most states, a homestead is exempt from a foreclosure or forced sale for collection of debt because homesteads are often exempt from levy or liens, at least to a certain extent. This is referred to as the “homestead exemption” and vary by state.
In Pennsylvania, a homestead exclusion or often called homestead exemption lowers property taxes by reducing the assessed value of the home. See also the PA Taxpayer Relief Act. This act provided for “property tax reduction allocations to be distributed by the Commonwealth to each school district. Property tax reduction will be through a homestead or farmstead exclusion.”
The home is assessed at $150,000 and the homestead exclusion is $15,000, the homeowner only pays taxes on an assessed value of $135,000. The lower assessed value isn’t zero but it’s also not the full assessed value that would otherwise require a higher tax payment.
NOTE: In PA, the homestead MUST be the owners permanent and primary residence on which property taxes are paid.
PA Farmstead Exclusion
In PA, the term “homestead exclusion” is also use in conjunction with the “farmstead exclusion” principle. The Pennsylvania farmstead exclusion provides property tax relief to those who farm their land. These farmers are given an exclusion when applied to their buildings used for agricultural purposes on a farm that is at least 10 contiguous acres (another tax principle called Act 319 – “Clean & Green” status which also lowers your taxes). The farmstead exclusion is applied when it’s also the primary residence of its owner.
Pennsylvanians in 66 counties can receive property tax relief through homestead and PA farmstead exclusions. If you’re a farmer and need to apply for this exclusion, you may fall under both SS1 and Act 72. Homestead and farmstead exclusions that were approved under Act 72 remain valid under SS Act 1. However, taxpayers may still be required to reapply for an exclusion every three years. SS Act 1 only applies to residential property owners.
If you have questions about the Pennsylvania homestand exemption & PA farmstead exemption, we’d always advise you contact a real estate attorney. Remember it’s always Buyer Beware when you considering real property, especially when reviewing your ability to claim either homestand or farmstand exclusions.