Homestead Exemption Fraud


Homestead exemption is a rule found in certain states that will exempt homeowners from paying tax on their primary residence.  Homestead exemption fraud occurs when taxpayers take advantage of the tax break to fraudulently receive cash refunds, credits and other reductions using simple techniques, including:

  • Keeping the exemption of a deceased person
  • Having multiple homestead exemptions
  • Claiming an elderly exemption when a person is not elderly
  • Renting a homesteaded property when claiming it as a primary residence

How is Fraud Perpetrated by the Humbug Gang

Here’s the good news:  this type of fraud isn’t usually perpetrated by organized criminal groups – at least the Humbug Gang hasn’t figured it out yet.

How is fraud perpetuated by the Deceit Family

The family’s vacation house on the shores of Fraudia has always been a great escape.  It was owned by Chuck’s mother, so they used to visit often when Chris and Sally were growing up.  About five years ago, however, Chuck’s mother passed away and the family house was passed on to Chuck and Donna.  To avoid getting taxed on it, they took on the identity of the grandmother, and pretended she still lived at the house and had never passed.  This helped the family claim homestead exemption on their taxes.

How the government can prevent it

Using the comprehensive public records database, Dolus is stopping homestead exemption fraud.  The new database will flag all records that have any indication of fraudulent activity so a government employee can look further into the case.  Indicators of fraudulent accounts include: multiple properties; age or death of owner; property assessment value; or multiple residencies.  The comprehensive database gathers information from death records, previous homestead exemptions, census information and more to verify every given record claiming homestead exemption.