Good News for Homeowners

Effective January 1, 2021, the California Homestead Exemption was significantly increased to the greater of $300,000 or the countywide median sale price of a single-family home in the calendar year prior to the year in which the exemption is claimed, not to exceed $600,000. Moreover, the exemption amount, whether $300,000 or $600,000 is adjusted annually for inflation beginning on January 1, 2022. By contrast, under former law, the amount of automatic homestead exemption was just $75,000 for single homeowners, $100,000 for married homeowners, or $175,000 for homeowners who are seniors and/or disabled.

The new homestead exemption is a significant increase that could protect all or part of the value of a person’s primary residence (house, condo, motor home or boat) from creditors in and outside of a bankruptcy. Specifically, the specified portion of the equity in a homestead is exempt from execution to satisfy a judgment debt. In the words of one of our esteemed real estate colleagues, “It’s a game-changer for debtors contemplating bankruptcy.” Their creditors will also be affected. If you would like help understanding the homestead exemption or have other real estate issues, we can help. Hit Reply to schedule a Get Acquainted Call.