Homestead Exemption in Colorado

When I hear the word “homestead”, I think of early settlers running across the Midwest plains and looking for a plot of land to claim as their own. A total of 10% of U.S. land was snatched up by or given to our predecessors. Free land to expand the Land of Freedom. An opportunity for those who could never outbid wealthy landowners from the South. What an adventure to live during those times! Claim free land and cultivate it into a home and livelihood for generations to come. (A humble heart acknowledges the loss and suffering of the First Nations who were pushed out to accommodate the expansion of the settlers. We honor you.)

SECURING A FUTURE

The days of homesteading are a distant memory. No more land is available on the mainland (though I hear Alaska still has some!). Even so, wouldn’t it be nice to know that the property we own now is secure and available to pass down to the next generation? Such security is not guaranteed anymore, yet several states now have Homestead Laws to help protect and alleviate the stress of taxes on one’s primary residence.

When I lived in the mountains of Colorado, I met many families living at a poverty level, yet were blessed with homes and land passed down through the generations. However, as property taxes started to rise with the influx of an affluent population looking for vacation or retirement homes, their once secure lands were being threatened. Property values skyrocketed and I watched several families lose their family property and houses because they could no longer afford the taxes that were assessed.

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In 2000, the state amended the Colorado constitution to include the Homestead Law. While it’s not perfect or ideal, the law does give seniors a break on their primary residence. Additionally, families going through bankruptcy may receive protection on a primary residence. In other words, it protects the value of the home or residents from property taxes, creditors, and circumstances arising from the death or debt of the homeowner.

The Colorado Homestead Law:

• Prevents a forced sale of a home to meet demands of creditors.
• Provides a surviving spouse with shelter.
• Provides an exemption from property taxes.
• Applies to one primary residence.

PROTECTION FROM CREDITORS

The Colorado Homestead Exemption allows one to exempt up to $75,000 of their real property value when filing bankruptcy. There are two main types of bankruptcy for individuals. Chapter 7 bankruptcy is typically applied to lower income individuals and involves liquidating your assets to pay off your debt. Chapter 13 bankruptcy, although similar, involves reorganizing and forgiving some debts through a payment plan. With home equity greater than the exemption amount, the difference is subject to a legal claim from creditors.

This protection applies to single family detached homes, as well as town homes and condominiums, even mobile homes, manufactured homes and trailers. (consult your attorney)

Let’s consider a home worth $200,000 with a mortgage balance of $130,000. This property has an equity value of $70,000. Assuming a sale at the full market value of $200,000, the owners receive their $60,000 exemption. The balance belongs to creditors. However, in the case of only $40,000 equity in a home, the home is under the protection of the Homestead Exemption. For example, if the owner of a mobile home in Denver has to file Chapter 7 bankruptcy, they retain the right to their primary residence and remain safe from any actions from creditors.

Citizens over 60 or with a disability receive an exemption of $105,000.

The exemption does not double for married couples.

If you need more info or protection from creditors, please contact a local Bankruptcy attorney for legal advice, including all pertinent laws and protection for your situation.

Related Reading: 5 Options to Foreclosure

HOMESTEAD EXEMPTION FOR SENIORS

The Colorado exemption is also available in order to protect the elderly who have invested in their primary home. Senior citizens receive a significant reduction in their property tax value. Property owners over 65, or their surviving spouse, qualify to receive a 50% deduction for the first $200,000 in value of their primary residence. This means a home worth $250,000, receives a $100,000 deduction resulting in a property assessment based on $150,000 value. Subsequently, a home worth $150,000, receives a $75,000 exemption, leaving a property value of $75,000.

To qualify:

• Must be 65 years of age on January 1 of the year they apply for the exemption.
• A surviving spouse of a qualifying owner.
• One must be the owner of record for the property in question for 10 consecutive years.
• Must be the primary residence of the owner on record for 10 consecutive years.
• The property is classified as residential.
• Legal address for the property is listed on your voter registration or other official documents.
• For seniors that own a multiple dwelling unit, only the unit occupied by the applicant is used for the exemption.
• Can only apply on one property.
• To receive the exemption, you must apply with your county assessor.
• Only need to apply once.

The filing deadline is July 15. For instructions and the forms to file for your Homestead Exemption are located here:

Senior Property Tax detailed information – EL PASO COUNTY

Senior Property Tax Short Form – TELLER COUNTY

DISABLED VETERAN EXEMPTION

Disabled American veterans are included in the tax break on their primary residence. The extra benefit that they receive is that they do not have to be 65. Also, they do not have to occupy their home for 10 consecutive years. Instead, a qualified veteran includes one who has:

1. A 100 percent permanent and total disability rating from the US Dept. of Veterans Affairs.

2. The disability is a service-related disability.

3. Have occupied the home since January 1 of the year the application is submitted.

If you are a disabled veteran, first let me thank you for your service and your sacrifice. I have a special place in my heart for the military and disabled veterans. We are a United States military family as well. Secondly, the forms to apply for your Homestead Exemption are located here:

VA PROPERTY TAX EXEMPTION FORM

A FINAL NOTE

The Homestead / Property Tax Exemption is for one property for an individual or a married couple, a senior citizen or disabled veteran.  If an individual or a married couple applies for an exemption on more than one property, the exemptions will be denied on every property.

I hope you found this information helpful. Please pass it on to the senior citizens or disabled veterans that you personally know. Many of them are not aware of this benefit available to them, or they have forgotten about it. Individuals on a low or fixed-income appreciate every dollar they can save in their budget!