The homestead exemption is associated with your real property tax which is an allowable state tax deduction as an itemized deduction.
It is similar to a state income tax refund. You can deduct the tax paid in the year you pay it. If you get a refund in the next year, you can enter it as income on your federal return in the year it is refunded.
You should report it, assuming you deducted it in a previous year, in the Other Common Income section, and then State and Local Tax Refunds.
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