Homestead Exemption California

California's generous homestead exemption law, known as the California homestead exemption, will protect your home equity if you must file for bankruptcy or experience financial distress. California law allows homeowners to protect a certain amount of equity in their principal residence from creditors, detailing both automatic protections and additional options for declaring a homestead to enhance these protections. 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. The California 2024 exemption amount will equal the countywide median sale price for the prior fiscal year. 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.

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 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, mobile home, condo, or boat.

To qualify for the total homestead exemption, you must have owned a home in California for at least 1215 before filing for bankruptcy. First-time homeowners need to understand this clearly as those who have owned a home for less than 1215 days will find their exemption capped at $189,050.00 per Federal Law. This law applies to people who have recently moved into the state and anyone who has yet to own a home. Declared homesteads can be transferred to new homes, so you do not necessarily have to have lived in your current home for the entire duration of the Rule, but you must have had a homestead in California for at least 1215 days.

Filing a declaration of homestead §704.950 is a simple and fast process. Complete a Declaration of Homestead form and have your signature notarized. Homeowners can find the form 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, lowering your annual property taxes by $7,000 anually.

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. 

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

Foreclosure
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. Priority creditors will use proceeds from property sales 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 almost 20 years. Together, we will calculate your current monthly income for the prior year to determine filing eligibility. 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