02/14/2021
California New Homestead Exemption Increased to $600,000.
On September 15, 2020, California Governor Gavin Newsom signed into law Assembly Bill 1885 (AB1885) which increases the creditor homestead exemption for personal residences in the Golden State. The new homestead will have 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. These new homestead amounts will also be indexed against inflation in the future, so they will automatically increase without the Assembly having to revisit them ever so often.
These changes go into effect as of January 1, 2021, and they replace California's terribly antiquated former homestead exemptions which provided a confusion range from only $50,000 for a single debtor to up to $175,000 for a married elderly couple. Considering the high prices for California homes — in most coastal counties you couldn't buy the parcel for a mailbox for $50,000 — the prior homestead exemptions meant that many Californians were displaced from their homes because of indebtedness, which then often rendered them homeless and thus an additional burden on the state's limited public resources.
