For Massachusetts homeowners, there’s big news: the Homestead Exemption has recently increased to $1 million. This significant change enhances financial protection for homeowners, but what exactly does it mean, and how does it impact your home and assets? Below, we break down the Homestead Exemption, what it protects, and what it does not cover.
What Is the Massachusetts Homestead Exemption?
The Massachusetts Homestead Exemption helps protect a homeowner’s primary residence from if they are sued by someone or if they go bankrupt. The exemption ensures that a portion of your home’s equity cannot be taken.
With the recent increase, homeowners can now protect up to $1 million in home equity, which is a significant boost from the previous limit.
What Does the Homestead Exemption Protect?
The Homestead Exemption provides protection against unsecured creditors, meaning those who do not have a lien or mortgage on your home. Specifically, it:
Prevents most creditors from forcing the sale of your home to satisfy debts.
Protects up to $1 million in home equity if you have declared a homestead.
Automatically protects up to $125,000 in home equity, even if you do not formally file a homestead declaration.
Applies to your primary residence, whether it is a single-family home, condominium, or certain other types of property.
What the Homestead Exemption Does NOT Protect
While the Homestead Exemption offers strong protections, it does not make your home completely immune from all types of claims. The exemption does not protect against:
Mortgage foreclosures – If you fail to make mortgage payments, your lender can still foreclose on your home.
Tax liens – If you owe state or federal taxes, the government can place a lien on your property.
Child support or alimony obligations – Court-ordered payments related to family law obligations are not protected.
Mechanic’s liens – If contractors or construction companies are owed payment for work done on your home, they may be able to enforce a lien.
Medicaid Estate Recovery – MassHealth may attempt to recover costs from your estate after your passing if you received long-term care benefits.
Not applicable to Second Homes – The Homestead Exemption does not work for second homes or vacation homes.
How to Ensure Full Protection Under the Homestead Exemption
To maximize your protection under the Massachusetts Homestead Exemption, homeowners should take the following steps:
File a Homestead Declaration – While $125,000 is automatically protected, filing a Homestead Declaration at the Registry of Deeds allows you to protect up to $1 million in equity.
Understand Your Home’s Equity – If your home’s value exceeds $1 million, any amount over that limit is vulnerable to claims from creditors.
Keep Up with Mortgage and Tax Payments – Since mortgages and tax liens are not protected, ensuring timely payments can prevent foreclosure risks.
Medicaid Planning—Long-term care can be expensive, and many people need to rely on Medicaid benefits for assistance. Planning in advance can help protect the equity in your home since the Homestead Exemption does not. For most people in Massachusetts, their home is their most valuable asset and is worth protecting with Medicaid Planning.
Why This Matters More Than Ever
The increase in the Homestead Exemption is a welcome change, especially given rising home values across Massachusetts. Protecting your home equity from unexpected financial hardships is a key aspect of long-term financial security. If you haven’t yet declared a homestead, now is the time to do so.
Need Help with Estate or Asset Protection Planning?
At Senior Solutions Attorneys at Law, we help homeowners and families navigate their legal rights and financial protections. If you have questions about the Massachusetts Homestead Exemption, Medicaid Planning, or estate planning strategies, contact us for guidance.
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Senior Solutions, Attorneys at Law, is an estate planning and elder law firm that has been serving the Greater Boston, Massachusetts area since 2001. We are ready to help you with Medicaid Planning, Estate Planning, Probate, Guardianship & Conservatorships, Special Needs Trusts, and Fiduciary Services. We are here to help. Please call our office at 617-489-5900 or schedule a brief free consultation (offered to new clients) by clicking: https://seniorsolutions.as.me/FreeConsultÂ