Final answer:
An owner occupied home may qualify for a homestead exemption which reduces its taxable value, and the exemption amount varies by location. Home equity is calculated by subtracting the outstanding loan amount from the market value of the home.
Step-by-step explanation:
An owner occupied home may be entitled to a homestead exemption, which varies by state and municipality. This exemption is typically a dollar amount or percentage of the property value that is excluded from tax assessment, thereby reducing the taxable value of the property. For instance, if the exemption is set at $50,000 and the home is valued at $250,000, tax is calculated on the reduced value of $200,000.
For exact exemption values, it is essential to check local laws and regulations, as they can significantly differ. Some areas may offer additional exemptions for seniors, veterans, or people with disabilities. These exemptions are important for homeowners as they can help to lower the annual property tax bill, thus making home ownership more affordable.
Calculating home equity is another important aspect of home finances. It is the monetary value the owner would have after selling the house and repaying any outstanding bank loans. For example, if a homeowner has a house valued at $250,000 on the market and owes $100,000 on the mortgage, then the owner's equity would be $150,000.