If the word "homestead" evokes images of grand expanses of land that are free for the taking, that vision belongs in a different century. Today, creating a homestead does not involve claiming and working the land. Rather, in Nevada as in other states, it is a way for a homeowner to protect a certain amount of the equity in their home from creditors.
Nevada homestead exemptions are creatures of state law, not county regulations. Therefore, the Washoe County, Nevada, homestead exemption is the same as the exemption available throughout the state. Filing for this homestead exemption is fairly straight forward.
What Is a Homestead Exemption?
A homestead exemption is a financial tool that can protect some of a homeowner's equity in their home in case of bankruptcy or debt collection. This guarantees homeowners the right to keep their homes if their equity is within the limits of the homestead exemption, even if attacked by debtors or if filing for bankruptcy.
If their equity is in excess of the amount of the exemption, the homeowner may sell the home and retain the amount of the homestead exemption. Some states allow a married couple to file a homestead in double the amount of the single-owner exemption. Still others permit a homeowner to choose between the federal homestead exemption and the state homestead exemption, but not Nevada.
Nevada Homestead Exemption
The homestead exemption in Nevada is set out in state law, specifically, in Chapter 115 of the Nevada Revised Statutes. This law is purely a creature of statute. This means that the homestead law is created by state laws and cannot be modified by a court or by the administrative act of any government agency.
The amount of the exemption is applied statewide and does not vary among counties within the state. The amount of the exemption and the rules that apply to claiming it are changed regularly by the Nevada legislature. Raising the exemption is usually considered as home prices in Nevada go up. For many years, the homestead exemption in Nevada was $550,000; in 2019, it was raised to $605,000.
Exemption Protects From Foreclosure
The purpose of the Nevada homestead exemption is to protect a primary residence from foreclosure by a general civil creditor who is owed debts like medical bills, credit card debt, business and personal loans, liabilities arising from a car accident, and even those occasioned by a bankruptcy filing.
Any creditor who sues an individual for one of these types of debts will be able to put a lien on their property, but they will not be able to foreclose on it or sell it. This assumes that the homeowner properly filed and recorded the homestead exemption in the county in which the residence is located, and that the equity in the property is under $605,000.
Note that the state of Nevada does not give the homeowner the option of using the federal homestead exemption instead, nor does it permit the doubling of the amount if the property is owned by a couple.
Protection Is Limited
Although the Nevada Homestead Exemption Law is quite generous, it does not offer across-the-board protection to all property owners for all debts. First, it only applies to primary residences. That means it will not protect:
- Rental property.
- Second homes.
- Investment properties.
- Vacant land.
In addition, there are some kinds of debts that are not covered at all. The exemption in Nevada does not protect a homeowner from mortgages or property liens when the structure or the land has been used as a form of collateral. A primary residence is not shielded from certain other debts, many of which are owed to the government, including:
- Property taxes.
- IRS liens.
- Repayment of government benefits.
- Mechanic’s liens.
- Debts securing a mortgage or deed of trust.
Exemption Protects Equity
Many Nevada homes have a market value of above $605,000. Does this mean that they are not protected? Not necessarily. The homestead protects equity, not fair market value.
Equity is not dependent on fair market value but, rather, the value of the home after the mortgage is paid. For example, a homeowner would have less than $605,000 in a home with a fair market value of $700,000 if they still owned $95,000 or more on the mortgage.
If the homeowner's equity is above $605,000, they may be forced to sell the home to pay judgment debts. However, the homeowner is permitted to retain the first $605,000 from the proceeds of the sale.
Washoe County Declaration of Homestead
In order to be eligible for this equity protection, the homeowner must have filed a declaration of homestead in the county in which the property is located. Those with a primary residence in Washoe County can download a Declaration of Homestead form from the Washoe County Recorder’s office.
Use the Forms menu to locate the homestead PDF file. Alternatively, stop by the recorder's office for a copy or phone in a request to be mailed a copy.
Fill out a downloaded form using Adobe Reader, or print it and fill it out manually. The form requires:
- Name of the person filing.
- Marital status.
- Assessor's parcel number or assessor's manufactured home ID number.
- Legal description of the property.
- Estimated fair market value.
The form must be signed before a notary, then recorded in the Washoe County Recorder’s office. There is a filing fee to record.
Quirks in Nevada Homestead Law
Obviously, Nevada homeowners benefited by the increase in the amount of the state homestead exemption. However, other changes were made to the law at the same time that may not appear so beneficial.
The legislature added limitations on the equity protection after sale when it increased the protection to $605,000. These provisions provide that when the $605,000 exempt amount is held back from the proceeds of a sale of the home, the property will be eligible only for the homestead protection only if certain conditions are met:
- Homeowner must reinvest the amount in another similar property for which a homestead will be made.
- New property must be selected and identified no later than 45 days after the sale of the homestead property.
- Homeowner must take possession of the new homestead property within 180 days from the sale of the original homestead.
The effect of these conditions is to require a homeowner whose primary residence is sold to repay their debts quickly. Their equity will only be protected for 180 days after the sale, and only if they are reinvested in new homestead property.
- You may submit your homestead exemption immediately after signing the purchase paperwork of your Washoe County home; there is no waiting period. Your home is protected as long as it remains your primary residence. Protection begins immediately after filing your exemption application.
- You may only file homestead exemption for your primary residence, which is the home you reside in permanently. You do not have to refile the declaration of homestead each year; you only refile if you move into another residence.
- If you do not know the assessor parcel number, the Washoe County Assessor's website (co.washoe.nv.us/assessor) lists the information. Click the "On-line data" link in the welcome message. Click "Property Assessment Data" under the "Washoe County Assessor's Data Available On-Line" heading. Click "Go to Search Page" under the disclaimer. You can search by owner's name, address or ZIP code. The number is under the "APN" column in the search results.
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.