also increase a home’s value through home improvements, thus both making your home more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and appeal, while potentially boosting its value. Tax advantages of home ownership. There are significant tax benefits associated with buying a house, both at the time of purchase and for the duration of time you own the home: • Homestead exemption: Many states exempt owner- occupied homes (homesteads) is a legal protection designed to help homeowners safeguard a portion of the value of their primary residence from creditors. While it does not reduce property taxes, it shields a set amount of a home’s equity in cases of financial hardship, bankruptcy, or debt collection. For instance, California the homestead exemption automatically protects a portion of a homeowner’s equity in their primary residence. For 2025, the exemption is based on each county’s median home price, with a statewide floor of $361,076 $361,076and a ceiling of $722,507. In San Bernardino County, the exemption amount is about $461,349 $461,349. • Homeowner's exemption: Many states provide property tax exemptions for owner-occupied homes. In California, the Homeowners’ Exemption reduces the assessed value of a primary residence by $7,000. For example, a $500,000 home in San Bernardino County would be taxed as if it were worth $493,000 $493,000, resulting in about $70 in a $70 in annual property tax savings. • Federal tax deductions: When you’re looking to purchase a home, it’s important to understand what can be 22
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