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Homeowners' Exemption. The California Constitution provides a $7,000 reduction in the taxable value for a qualifying owner-occupied home. The home must have been the principal place of residence of the owner on the lien date, January 1st.
How Will the New California Homestead Exemption Protect Homeowners? Before AB 1885 went into effect on January 1, 2021, the homestead exemptions in California were $75,000 for a single homeowner, $100,000 for a married couple, and $175,000 for families who met specific requirements.
Under California law, a homeowner is entitled to the protection of a certain amount of equity in the home that is his or her principal residence (home). The protected amount is called the “homestead exemption.” Related Guide: Exemption from the Enforcement of Judgment
The homeowners’ exemption in California, not to be confused with the homestead exemption, is a provision that can reduce the taxable value of a qualifying, owner-occupied residence by $7,000. This translates to a savings of approximately $70 to $80 in annual property taxes, and it depends on your local property tax rate.
Currently, the California homestead exemption is automatic, meaning that a homestead declaration does not need to be filed with the county clerk. Under the new 2021 law, $300,000–$600,000 of a home’s equity cannot be touched by judgment creditors.
One of the most important protections is the homestead exemption. While the rules for homestead exemptions vary by state, here in California, we recently had an increase in the exemption limit thanks to California Assembly Bill 1885 back in 2020, bringing it up to between $300,000 and $600,000.
California homeowners can reduce their assessments by $7,000 by claiming a homeowners exemption, but almost a third in Los Angeles County do not.
The California homestead exemption in 2020 was $75,000 for a single homeowner, with a maximum of $175,000 for homeowners who met specific family, income, and age requirements. The new law eliminates many qualifying conditions and provides a homestead exemption to anyone with a principal residence.
What is the Homestead Exemption? The Homestead Exemption protects a portion of home equity from creditors. In scenarios such as bankruptcy or a costly lawsuit, this exemption ensures that creditors cannot claim the protected amount to settle outstanding debts. It also offers relief on property taxes by reducing the taxable value of your home.
The homeowners' exemption allows an owner to reduce property tax liability on a dwelling which is occupied as the owner's principal place of residence as of 12:01 a.m. on the lien date (January 1). The maximum exemption is $7,000 of the full value of the property.