I really despise German tax language, which is why I don't do my own relatively simple German taxes even though I've prepared my own complex US tax returns (back in the day when I had complex US income) for years.
Still, I'll wager diving into the world of German tax language and offer my two cents here.
I don't think that anything related to "Abschreibung" is correct. As I understand it, an "Abschreibung" usually involves taking a deduction for a portion of the price of object X over Y years. That's not what a homestead exemption is.
Here's the Wiki article on it: http://en.wikipedia.org/wiki/Homestead_exemption
However, my experience with a homestead exemption is rather different than items 1 and 2 in their list of four typical purposes of a homestead exemption. That's likely the case because, as I recall, there is no "homestead exemption" in US federal law, so the states can adopt it as they wish, and they tend to use the term in various ways.
What would tend to be similar in all is the notion that "homestead" = "primary residence." In many cases, the "exemption" would be similar to what I understand the "Freibetrag" to be in German taxes. (Note that US taxes have both exemptions and deductions, and they are two different things.)
Since, as far as I know, the concept doesn't exist in German tax law (but my ignorance may be due to the fact that I rent rather than own...), it may be best to keep the English term and describe it in German in parentheses.