How much is the California homestead exemption?

Under Code of Civil Procedure section 704.730, it is the greater of the prior year's countywide median single-family home sale price, capped at a base of $600,000, or a base floor of $300,000. Both figures adjust annually for inflation from January 1, 2022, so the current amounts are higher than those base numbers. In practice a homeowner in a low-cost county gets at least the floor, a homeowner in a high-cost county gets the cap, and everyone else gets their county's prior-year median.

What changed in 2021?

Assembly Bill 1885, effective January 1, 2021, replaced the old fixed exemption tiers of $75,000, $100,000, and $175,000 with the new median-based formula in section 704.730. The change sharply increased the protected amount for most homeowners, since even the floor of $300,000 far exceeds the old top tier. The prior amounts no longer apply. This is a frequently tested update because the old numbers still appear in outdated study materials.

What is the difference between an automatic and a declared homestead?

The automatic homestead arises by law with no filing and protects the exempt equity in a forced sale, with proceeds exempt for six months after an execution sale, damage or destruction, or public acquisition (section 704.720). A declared homestead is created by recording a homestead declaration before a judgment lien attaches; it provides the same dollar amount but also protects the proceeds of a voluntary sale for six months (section 704.960) and blocks later judgment liens from attaching to exempt equity. The declaration extends when the exemption applies, not how much is exempt.

Does the homestead exemption stop a foreclosure?

No. The exemption does not defeat a mortgage or deed of trust the owner voluntarily signed, because that is a consensual lien. A lender can still foreclose on its deed of trust regardless of the homestead. The exemption protects equity from involuntary judgment creditors — such as someone who won a lawsuit — not from liens the owner agreed to grant, and not from a properly perfected mechanics lien or a purchase-money lender.

Who can claim the homestead exemption?

A natural person who resides in the dwelling as their principal residence can claim it; it applies to the home the debtor actually lives in, not to investment or vacation property. The automatic homestead requires no action. To gain the added protections of a declared homestead, the owner records a homestead declaration with the county recorder. The exemption amount is determined when the debtor claims it, using the prior calendar year's countywide median sale price.

Does the exemption adjust over time?

Yes. Section 704.730(b) requires both the floor and the cap to adjust annually for inflation beginning January 1, 2022, based on the change in the California Consumer Price Index, rounded to the nearest $25. That is why the current operative amounts exceed the $300,000 and $600,000 base figures in the statute. When answering an exam question, treat those base numbers as the statutory baseline and remember that inflation indexing has raised the real-world figures each year since.

California Homestead Exemption: CCP 704.730 After AB 1885

TL;DR

The California homestead exemption protects a portion of the equity in a person's principal dwelling from most creditors, and its dollar amount changed dramatically in 2021. Under Code of Civil Procedure section 704.730, as amended by Assembly Bill 1885 effective January 1, 2021, the exemption is the greater of two figures: the countywide median sale price of a single-family home in the prior calendar year, capped at a base of $600,000, or a base floor of $300,000. Both the floor and the cap adjust every year for inflation, beginning January 1, 2022, based on the California Consumer Price Index, so the current figures are higher than the base amounts written into the statute. This replaced the old fixed tiers of $75,000, $100,000, and $175,000 that had applied for decades. Two kinds of homestead exist in California and the exam tests the difference: the automatic homestead protects exempt equity when a creditor tries to force a sale of the home, while a declared homestead, recorded before any judgment lien attaches, adds voluntary-sale proceeds protection. The exemption does not defeat a consensual mortgage or deed of trust the owner signed, and it does not stop a purchase-money lender or mechanics lien claimant. It shields equity from ordinary judgment creditors, not from liens the owner agreed to.

What the homestead exemption protects

A homestead exemption sets aside a dollar amount of equity in a person's principal residence that a judgment creditor cannot reach. If a creditor forces a sale of the home to satisfy a money judgment, the exempt amount is paid to the homeowner first, before the creditor collects anything from the proceeds. The point is to keep a family from being made homeless by an ordinary creditor while still allowing the creditor to reach equity above the exempt amount. The protection runs to the equity — the value left after mortgages and senior liens — not to the whole value of the house.

What the exemption does not do is just as important. It does not override a mortgage or deed of trust the owner voluntarily signed, because that is a consensual lien the owner agreed to. It does not stop a purchase-money lender protected by the anti-deficiency rules, and it does not defeat a properly perfected mechanics lien for work that improved the property. The homestead exemption is aimed at involuntary judgment creditors — the credit-card issuer, the plaintiff who won a lawsuit — not at liens the owner chose to grant. That boundary is why it interacts with recorded construction liens, covered in our guide to the mechanics lien under Civil Code 8000.

How much is exempt under section 704.730

Before 2021, California used flat homestead amounts: $75,000 for a single homeowner, $100,000 for a member of a family unit, and $175,000 for an owner who was elderly or disabled. Assembly Bill 1885 scrapped those tiers. Under the current section 704.730, the exemption is the greater of the countywide median sale price for a single-family home in the prior calendar year, up to a base cap of $600,000, or a base floor of $300,000. In a low-cost county where the median is below the floor, the homeowner still gets at least the floor amount; in a high-cost county where the median exceeds the cap, the exemption is limited to the cap. Everywhere in between, the exemption equals the prior year's county median.

The statute also indexes both numbers to inflation. Section 704.730 provides that the amounts adjust annually beginning January 1, 2022, based on the change in the California Consumer Price Index, rounded to the nearest $25. That means the operative floor and cap in any given year are higher than the $300,000 and $600,000 base figures written into the code, and a candidate should treat those base numbers as the statutory starting point that inflation has since raised. The exemption amount is measured at the time the debtor claims it, using the prior year's county median. Because the protected amount can be substantial, homeowners sometimes record a declared homestead to lock in added protection, which ties into how equity is measured against senior claims like the property-tax assessment covered in our guide to Proposition 13 property tax assessment.

Automatic homestead versus declared homestead

California recognizes two homesteads, and the exam expects candidates to tell them apart. The automatic homestead, sometimes called the statutory homestead, arises by operation of law and requires no filing. It protects the homeowner when a creditor tries to force a sale of the residence: the exempt amount comes off the top of the forced-sale proceeds. Its limitation is that it generally protects against forced-sale situations — under Code of Civil Procedure section 704.720, the proceeds stay exempt for six months after an execution sale, damage or destruction, or acquisition for public use. Voluntary-sale proceeds protection is the added benefit of a recorded declared homestead.

A declared homestead is created by recording a homestead declaration with the county recorder before a judgment lien attaches. It provides the same exemption amount but adds a benefit under Code of Civil Procedure section 704.960: it protects the proceeds of a voluntary sale for six months, giving the owner time to reinvest in a new home, and it keeps a later judgment lien from attaching to the exempt equity. A declared homestead does not increase the dollar amount of the exemption; it extends when and how the exemption applies. For most homeowners the automatic homestead is enough, but a declared homestead is a low-cost step that can matter when a judgment is looming. Because the declaration is a recorded document that interacts with title, it connects to the broader disclosure and recording framework, including our guide to the transfer disclosure statement.

Frequently Asked Questions

How much is the California homestead exemption?: Under Code of Civil Procedure section 704.730, it is the greater of the prior year's countywide median single-family home sale price, capped at a base of $600,000, or a base floor of $300,000. Both figures adjust annually for inflation from January 1, 2022, so the current amounts are higher than those base numbers. In practice a homeowner in a low-cost county gets at least the floor, a homeowner in a high-cost county gets the cap, and everyone else gets their county's prior-year median.
What changed in 2021?: Assembly Bill 1885, effective January 1, 2021, replaced the old fixed exemption tiers of $75,000, $100,000, and $175,000 with the new median-based formula in section 704.730. The change sharply increased the protected amount for most homeowners, since even the floor of $300,000 far exceeds the old top tier. The prior amounts no longer apply. This is a frequently tested update because the old numbers still appear in outdated study materials.
What is the difference between an automatic and a declared homestead?: The automatic homestead arises by law with no filing and protects the exempt equity in a forced sale, with proceeds exempt for six months after an execution sale, damage or destruction, or public acquisition (section 704.720). A declared homestead is created by recording a homestead declaration before a judgment lien attaches; it provides the same dollar amount but also protects the proceeds of a voluntary sale for six months (section 704.960) and blocks later judgment liens from attaching to exempt equity. The declaration extends when the exemption applies, not how much is exempt.
Does the homestead exemption stop a foreclosure?: No. The exemption does not defeat a mortgage or deed of trust the owner voluntarily signed, because that is a consensual lien. A lender can still foreclose on its deed of trust regardless of the homestead. The exemption protects equity from involuntary judgment creditors — such as someone who won a lawsuit — not from liens the owner agreed to grant, and not from a properly perfected mechanics lien or a purchase-money lender.
Who can claim the homestead exemption?: A natural person who resides in the dwelling as their principal residence can claim it; it applies to the home the debtor actually lives in, not to investment or vacation property. The automatic homestead requires no action. To gain the added protections of a declared homestead, the owner records a homestead declaration with the county recorder. The exemption amount is determined when the debtor claims it, using the prior calendar year's countywide median sale price.
Does the exemption adjust over time?: Yes. Section 704.730(b) requires both the floor and the cap to adjust annually for inflation beginning January 1, 2022, based on the change in the California Consumer Price Index, rounded to the nearest $25. That is why the current operative amounts exceed the $300,000 and $600,000 base figures in the statute. When answering an exam question, treat those base numbers as the statutory baseline and remember that inflation indexing has raised the real-world figures each year since.

Bottom Line

California's homestead exemption under Code of Civil Procedure section 704.730 protects a homeowner's equity from ordinary judgment creditors, and since Assembly Bill 1885 took effect on January 1, 2021, the amount is the greater of the prior year's countywide median single-family home price, capped at a base of $600,000, or a base floor of $300,000 — both indexed to inflation each year, replacing the old $75,000, $100,000, and $175,000 tiers. The automatic homestead needs no filing and protects against a forced sale, while a declared homestead, recorded before a judgment lien attaches, adds six months of voluntary-sale proceeds protection. The exemption shields equity from involuntary creditors but does not defeat a consensual mortgage, a purchase-money lender, or a perfected mechanics lien. For related topics, see our guides to the mechanics lien, Proposition 13 assessment, and the transfer disclosure statement.

Source: California Code of Civil Procedure § 704.730 (homestead exemption), amended by AB 1885 (Stats. 2020, Ch. 94). CCP § 704.730 (Justia) · CCP § 704.730 (leginfo) · CCP § 704.730 (FindLaw)