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California Homestead Exemption Increases in January 2021

On September 15, 2020, California Governor Gavin Newsom signed Assembly Bill 1885 into law, effectively increasing the homestead exemptions throughout the state. The previous homestead exemption laws followed a baseline of $75,000, whereas this new law increases the exemption to $300,000. The new law better reflects the costly housing market throughout the state and allows individuals and families seeking bankruptcy to retain their homes while seeking financial recovery. This new law will take effect in January of 2021 and will be readjusted annually to allow for inflation.

What is a Homestead Exemption?

In essence, homestead exemptions enable individuals and families filing for bankruptcy to keep their homes, rather than include them in their list of liquidated assets. The homestead exemption only protects homes up to a certain value, and only under Chapter 7 bankruptcy, or in the event that a creditor has the power to enforce a court order over the house.

2021 Homestead Exemption Changes for California Homeowners

The new law, which takes effect on January 1, 2021, increases the homestead exemptions. Previously, the exemption only covered a value of $75,000 per individual, $100,000 per married couple, or up to $175,000 for the disabled or those over 65 years of age.

In 2021, the exemptions will increase to a baseline of $300,000 but can be as high as $600,000 based on the median sale price of homes within a particular county in a particular year.

Furthermore, the new law allows for inflation, and beginning in January of 2022, will be adjusted annually based on changes in the annual California Consumer Price Index for All Urban Consumers for the prior year.

Interested in learning more about the Homestead Exemption Law? Read our other blogs:

For more information about your bankruptcy case and how the new homestead exemption law could help your situation or protect you from foreclosure, get in touch with our attorneys to learn more. 


Learn more about ways to protect your home from bankruptcy by contacting Wadhwani & Shanfeld.

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