As of January 1, 2021, the homestead exemption for California homeowners has increased from $75,000, $100,000, or $175,000 to the greater of $300,000 or $600,000, depending on certain factors.
Amended 2021 California Homestead Exemption – Section 704.730 Of California Civil Code
Section 704.730 of California’s Civil Code has been amended as of January 1, 2021 to provide:
(a) The amount of the homestead exemption is the greater of the following:
(1) The countywide median sale price for a single-family home in the calendar year prior to the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred thousand dollars ($600,000).
(2) Three hundred thousand dollars ($300,000).
(b) The amounts specified in this section shall adjust annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.
Prior to this change in the California homestead exemption law, the homestead exemption amount depended on the family dynamics, including marriage, age, or health, and was classified into “systems” which could be quite confusing.
Who Qualifies For Homestead In California?
The new 2021 California homestead exemption law does not reference the composition of the people living in the homestead to determine the amount of value of the homestead that is protected under California law. Instead, the law just looks at the dwelling itself.
Homestead under California law in 2021 remains defined as follows under section 704.710(c) as:
“Homestead” means the principal dwelling (1) in which the judgment debtor or the judgment debtor’s spouse resided on the date the judgment creditor’s lien attached to the dwelling, and (2) in which the judgment debtor or the judgment debtor’s spouse resided continuously thereafter until the date of the court determination that the dwelling is a homestead. Where exempt proceeds from the sale or damage or destruction of a homestead are used toward the acquisition of a dwelling within the six-month period provided by Section 704.720, “homestead” also means the dwelling so acquired if it is the principal dwelling in which the judgment debtor or the judgment debtor’s spouse resided continuously from the date of acquisition until the date of the court determination that the dwelling is a homestead, whether or not an abstract or certified copy of a judgment was recorded to create a judgment lien before the dwelling was acquired.
Currently the homestead exemption is automatic, but it is a good and cautious idea to file a homestead declaration with the clerk in your California county in order to protect the equity in your homestead. If a declaration is filed, the equity in the homestead is not lost after the sale of the home, as proceeds from the sale are protected for six months after sale.