Homestead Exemption California

Protect Equity in Your Home
California's generous homestead exemption law will protect your home equity if you must file for bankruptcy or if you experience financial distress. The homestead exemption protects homeowners' residences against any forced sale or judgment lien on the property. The minimum exempt equity under federal law changes annually with inflation or the countrywide median sale price for a single-family home, whichever is greater. California exemption amount will equal your county's median home sale price for the previous year (2023). The minimum exemption price in Los Angeles County is $349,715, and the maximum is $816,284. Homeowners who qualify can protect their assets by utilizing additional exemptions based on specific family size, people over 65, and disabled veterans.

Homeowner Eligibility Requirements
Anyone with a principal residence in the state will qualify for California's homestead exemption law. Homesteading protects primary residences up to the median home sale price amount for the previous year in the county where the home resides. The value of your home is fully protected as long as the equity amount is below the exemption limit. The exemption applies to the amount of equity of your dwelling regardless of whether it's a single-family home, condo, or boat.

Homestead Declaration
Filing a declaration of homestead §704.950 is a simple and fast process. Complete a Declaration of Homestead form and have your signature notarized. The form can be found at any office supply store or downloaded here. If you ever want to remove this protection, you fill out another form called a Declaration of Abandonment. The home's owner(s) must also sign and notarize this form. You can also file a homeowner's exemption which will lower your annual property tax bill by $7,000 each year.

Declared Homestead Exemption
If you sell your property and the proceeds are equal to your homestead exemption, you can reinvest the homestead funds into a new property. Proceeds from the sale of your property received six months or earlier can be used for a new home. In the event of the homeowner's death, the home will be passed on to the surviving spouse and dependent family members. 

Automatic Homestead Exemption
The automatic homestead exemption §704.730 allows anyone to homestead in a new home without making any declaration. Judgment creditors cannot force the sale of the home, but if you sell your home the creditor gets paid.

Homestead ensures your residence is fully protected from creditors, with a few exceptions. Debt owed to the IRS or other federal agencies, your HOA, mortgage lenders, or other Priority creditors can cause a lien on your property. Proceeds from property sales will be used by priority creditors to pay a judgment. Priority creditors will use the sale of property amount to settle past-due debt.

Contact Us
I have been a bankruptcy attorney in Riverside County for 20 years. Together, we will calculate your current monthly income for the prior year to determine means test eligibility to file for Chapter 7. Other determining factors for means testing may apply to your financial situation. Please note that you cannot utilize the exemption plus a wildcard when filing for liquidation bankruptcy.

Check the value of your residence to see if the sale price in your county has changed:
Riverside: $612,122
San Bernardino: $473,308
Orange: $1,261,667
San Diego: 931,918

Data Provided by:
California Association of Realtors
Department of Industrial Relations, Division of Labor Statistics

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