The California homestead exemption automatically protects between roughly $361,000 and $722,000 of equity in your primary residence from most creditor claims, with the exact amount tied to your county’s median home price. Every homeowner gets the protection without filing anything, but recording a formal homestead declaration adds a benefit that matters if you ever sell while a judgment is hanging over you. Here is what the exemption covers, where it stops, and how to use it.
How Much Equity Is Protected
Under California Code of Civil Procedure Section 704.730, the exemption equals the greater of two numbers: the countywide median sale price for a single-family home in the prior calendar year, or a statutory floor, subject to a cap.1California Legislative Information. California Code CCP 704.730 The original law set the floor at $300,000 and the cap at $600,000. Both figures adjust every January based on the California Consumer Price Index for All Urban Consumers. As of January 1, 2025, the adjusted floor sits at roughly $361,113 and the cap at roughly $722,151. The 2026 numbers will reflect the most recent CPI change, so confirm the current figure with your county recorder or a local attorney before relying on it.
In practice, if your county’s median sale price last year was $500,000, that is your exemption. If the median was $280,000, you still get the full floor. If the median was $900,000, you are held to the cap. And the exemption protects equity only, not the property’s full value. Equity is what remains after you subtract your mortgage balance and other liens from the home’s fair market value.
Which Homes Qualify
The exemption applies only to your principal residence. You have to live in the home and treat it as your primary dwelling. Investment properties, vacation homes, and rentals do not qualify. If a creditor challenges your claim, courts look at objective signs of residency.
California’s idea of a “dwelling” is broader than many homeowners assume. Traditional houses qualify, and so do:
- Mobile and manufactured homes, whether on a permanent foundation or not, as long as you live in them as your primary residence
- Condominiums and planned developments
- Stock cooperatives and community apartment projects
- Houseboats and other waterborne vessels used as a dwelling
One wrinkle: a declared homestead (the recorded kind) only applies to real property. Mobile homes not classified as real estate on county tax records, and houseboats, cannot receive a declared homestead, though they still get the automatic protection.
Automatic Homestead vs. Declared Homestead
California actually gives you two forms of homestead protection, and the difference trips up many homeowners.
The Automatic Homestead
Every California homeowner has this without filing anything. If a creditor gets a judgment and tries to force a sale of your home, the automatic exemption protects your equity up to the applicable amount. The protection exists the moment a creditor tries to execute on your property, provided you are living there as your principal residence.
The Declared Homestead
A declared homestead is a document you record with your county recorder. It provides the same dollar protection as the automatic exemption plus one important extra: protection of sale proceeds. If you sell your home voluntarily while a money judgment exists against you, the declared homestead keeps your exempt equity protected for six months after you receive the proceeds.2California Legislative Information. California Code CCP 704.720 That window gives you time to buy another home and record a new declaration on it. Without a declared homestead, sale proceeds can be exposed to creditors right away.
For most homeowners, filing the declaration is cheap insurance. If nothing goes wrong, it sits quietly in the record. If something does, it can save your equity during a move.
How to File a Homestead Declaration
Filing is straightforward. Get a homestead declaration form from your county recorder’s office or its website. The form asks for your name, a description of the property (street address and legal description), your ownership interest, and a statement that the property is your principal dwelling and you live there.
You sign the form in front of a notary. California caps notary fees at $15 per acknowledgment signature.3National Notary Association. 2026 Notary Fees By State Then bring it to the county recorder for recording. Recording fees vary by county but are generally modest.
What the Homestead Will Not Stop
The exemption is strong, but it has hard limits. It does not shield you from:
- Mortgage foreclosure. Your lender’s claim is secured by the property, so a default lets the lender foreclose regardless of homestead status.
- Mechanic’s liens. A contractor who worked on the home and was not paid can place a lien the homestead does not block.
- Child and spousal support judgments. Courts can enforce these against your home equity.
- Tax liens. State and federal tax liens attach to the property regardless of any homestead declaration.
The exemption mainly protects against unsecured creditors, such as credit card companies, medical debt collectors, and anyone holding a general money judgment against you.4Los Angeles County Department of Consumer and Business Affairs. Homestead Protection Even there, the protection has a ceiling. If your equity exceeds the exemption amount, a creditor can force a sale, but you receive your exempt portion first before any creditor is paid.
The Six-Month Window on Sale Proceeds
What happens to your equity after you sell is one of the most overlooked parts of California homestead law. With a declared homestead, your exempt equity stays protected for six months after you receive the funds.2California Legislative Information. California Code CCP 704.720 Within that window, you can buy a new primary residence and record a new homestead declaration to keep the protection running.
The protection expires if you do not reinvest in a new homestead within six months, or if you apply a homestead exemption to other property during that period. People lose the window without realizing it: they sell, take their time house-hunting, and the clock quietly runs out. If you are selling while a judgment exists against you, treat that six-month clock as a real deadline.
The Homestead Exemption in Bankruptcy
The homestead exemption plays a major role in bankruptcy, but the details shift depending on which exemption system and which chapter you use.
Two Exemption Systems
California is one of the few states with two complete sets of bankruptcy exemptions. System 1 uses the Section 704 exemptions, which include the full homestead tied to your county’s median home price. System 2 uses the Section 703 exemptions, which offer a much smaller homestead but include a flexible wildcard exemption you can apply to any property. You pick one system for the entire case. Married couples filing jointly must both use the same one.
Homeowners with significant equity almost always do better under System 1, because the homestead can reach past $700,000. System 2 tends to help renters or homeowners with little equity who would rather use the wildcard on vehicles, bank accounts, or other assets.
Chapter 7
In a Chapter 7 liquidation, the trustee can sell nonexempt assets to pay creditors. The homestead prevents the trustee from selling your home if your equity is within the exemption. Say you have $400,000 of equity and your county’s exemption is $500,000: the home is fully protected. If your equity exceeds the exemption, the trustee could sell the home, but you receive the exempt amount from the proceeds before any distribution to creditors.
Chapter 13
Chapter 13 lets you keep your property while repaying debts through a court-approved plan. The exemption still matters because your plan must pay unsecured creditors at least what they would receive in a hypothetical Chapter 7 liquidation. A larger homestead means less equity counts as available to creditors, which can reduce your required plan payments. The exemption does not eliminate secured debts like your mortgage; you still have to keep those payments current.
Stripping Judgment Liens
If a creditor recorded a judgment lien against your home before you filed for bankruptcy, you may be able to remove that lien entirely if it impairs your homestead exemption. Federal bankruptcy law lets a debtor avoid a judicial lien to the extent the lien, together with all other liens and the exemption, exceeds the property’s value. In California, where the exemption runs high, this tool frequently wipes out judgment liens completely.
Not the Same as the Property Tax Homeowners’ Exemption
California also has a separate “homeowners’ exemption” that reduces your property tax bill by taking $7,000 off your home’s assessed value, saving about $70 a year.5Los Angeles County Assessor. Homeowners Exemption That has nothing to do with the homestead exemption for creditor protection. The property tax exemption is claimed through your county assessor. The homestead declaration is recorded with your county recorder. Filing one does not give you the other, and if you have not claimed the property tax exemption on your primary residence, you are leaving money on the table every year.