What is the primary purpose of a homestead tax exemption?

The primary purpose of a homestead tax exemption is to provide tax relief on an owner’s principal residence. This exemption effectively reduces the taxable value of a home, which can lead to significantly lower property tax bills for homeowners. By lowering the financial burden of property taxes, the homestead exemption aims to encourage homeownership and stabilize communities.

The other options pertain to different aspects of property and economic factors. For example, while increasing property values can benefit homeowners in terms of equity, that is not the direct objective of the homestead tax exemption. Similarly, encouraging investment in rental properties or generating local business revenue are goals that focus more on economic development rather than directly assisting homeowners with tax relief. Thus, option A accurately captures the essence of the homestead tax exemption's role in supporting homeowners financially.