If homeowners purchase a new residence and rent their existing home, which statement is TRUE?

If homeowners purchase a new residence and rent their existing home, which statement is TRUE?

• A. They will keep homestead protection on the rented home, but not the new one.
• B. They will have homestead protection on neither home.
• C. They will have homestead protection on the new home but not the rented one.
• D. They will have homestead protection on both homes.

Answer: (C)

Homestead protection is a legal provision that provides homeowners with certain protections for their primary residence against creditors and legal judgments. In Arizona, when homeowners purchase a new residence and move into it as their primary home, they are entitled to homestead protection for that new home. This means that the new residence is eligible for the protections afforded under homestead laws. Conversely, the previous home that is now being rented out does not qualify for homestead protection, as it is no longer occupied as the owner's primary residence. Instead, it is considered an investment property, and therefore the homeowners lose the ability to claim homestead protection on that property. This distinction is crucial as it determines how the law applies to different properties based on their use. In summary, owners retain homestead protection only on their primary residence, which is the new home in this scenario, while the rented home does not qualify for such protection because it is not their residence anymore.

Homestead protection is a legal provision that provides homeowners with certain protections for their primary residence against creditors and legal judgments. In Arizona, when homeowners purchase a new residence and move into it as their primary home, they are entitled to homestead protection for that new home. This means that the new residence is eligible for the protections afforded under homestead laws.

Conversely, the previous home that is now being rented out does not qualify for homestead protection, as it is no longer occupied as the owner's primary residence. Instead, it is considered an investment property, and therefore the homeowners lose the ability to claim homestead protection on that property. This distinction is crucial as it determines how the law applies to different properties based on their use.

In summary, owners retain homestead protection only on their primary residence, which is the new home in this scenario, while the rented home does not qualify for such protection because it is not their residence anymore.