Homesteading Laws

  • 4 hours
  • Advanced

Twenty-seven states across the U.S. have state-specific homesteading laws to protect homeowners and landowners in financial crisis. A homestead is basically the home and land that a family lives in and on, but sometimes furniture and other personal belongings of that nature are roped in under the homestead umbrella. In financially tight times, a family may be able to declare their house and land as an official homestead and essentially create an estate in order to protect themselves and their property.

Homesteading laws mostly come into play when bankruptcy is involved. The intent behind these laws is to keep people in their primary places of residence when the debt starts to stack up. Essentially, homestead laws allow someone who has filed for bankruptcy but still has to live somewhere to file part of their home and land as a “homestead.”

Once officially registered, that part of the land and home become untouchable to debt collectors and creditors seeking payment and restitution. Though initially conceived with the idea of protecting farms and other small family trade businesses, homesteading laws have evolved and now help a variety of families in all walks of life.

homestead exemption written on spiral notebook

State by State Cases

Each state has different laws surrounding homesteading. One of the big differentiators is the amount you can claim and write off. In some states, fifteen thousand dollars worth of land and property can be included, in other states, that number is in the hundreds of thousands. Some states, like Arizona, allow for a small exemption limit to be applied to furniture. Other states allow for exemptions that include tools necessary for livelihood and trade, like a snowplow or a carpentry set.

In many places, homesteading exemption laws cover some personal property as well. You'll need to check specific state laws to make sure, but personal assets like clothing and family heirlooms also make the exemption list in several states.

vintage family heirloom book, magnifying glass and photographs

Federal Homestead Options

There are some federal homestead options that can be used instead of state homestead protections. Because it’s a one or the other situation though, you need to carefully weigh your choices before you make any decisions. The federal write off limit was a little under twenty-three thousand a few years ago, and that amount could be doubled for a married couple.

The federal homestead law also has a variety of caveats and exceptions. If you’re serious about getting your residents federally declared a homestead, make sure you do a significant amount of research before you jump in.

brown, white, and blue eggs on a pink cloth

Homesteading Declaration

If you're getting ready to declare your home and land as a homestead, it may be time to work the land a little more and become more self-sufficient. This will help your homestead case, reduce the funds you spend to eat and live, and give your land the chance to help support you and your family. Even in urban areas, you can add simple upgrades to your property that will cut costs and increase efficiency.

Consider adding a garden outside, or even an indoor herb garden. You can also build a chicken coop and house chickens in your backyard. This can be a source of food or revenue for your family. Check local laws, but in most places, it's legal to have chickens or other small animals on your property, especially if it's a homestead.