2024 California Homestead Exemption, increased by inflation

Brand new! The maximum 2024 California Homestead Exemption amounts

The 2024 California homestead exemption numbers are already available, and different from last year, and even the original range of $300,000 to $600,000. In fact, in 2024, they top out way higher than $600,000, which helps you save more of your home from creditors than the homestead exemption could in 2023. Why? Because of inflation. The new California homestead exemption is tied to the CPI, or consumer price index.  And everyone knows things lately aren’t cheap.

November 2023 update: The new inflation-adjusted 2024 California homestead exemption is now known. See below what it will be for cases filed after Jan 1, 2024. Don’t worry – the 2023 homestead exemption amount is still here for cases filed before on Dec 31, 2023 or earlier.

Basics about exemptions

Chapter 7 bankruptcy is liquidation; the bankruptcy trustee can take your stuff. They don’t take the shirt off your back, but at some point they draw the line regarding what you can keep. These are the bankruptcy exemptions, and each state has its own. The California exemptions include a way to protect home equity.

There are two sets of California bankruptcy exemptions. California bankruptcy attorneys call these the 703s and 704s. The California homestead exemption is found in the 704s, at California Code of Civil Procedure 704.730.  If you choose this way, you lose other things, including the ability to protect a tax refund. Meet with a bankruptcy attorney to find out what’s best for you.

The Three Homestead Exemptions in California Before 2021

In the old days, and by that, I mean prior to 2021, the California homestead exemption was based on the characteristics of the person filing bankruptcy, not the location of the real estate. It was subdivided a few ways. Firstly, there was the bankruptcy exemption that a single homeowner gets. This was in old subsection (a)(1). Most recently, a single person who lived in a house gets to protect $75,000 of home equity under the California exemptions.

Secondly, there was a higher exemption for a married person’s residence. This was in (a)(2). The California homestead exemption for a married person is $100,000 in the last year of this system.

Finally, if you can tick one of three boxes, you would get the superduper $175,000 homestead exemption in California’s bankruptcy exemptions. To level-up and qualify for this, you have to either be:

• 65 years old;
• have a disability that prevents gainful employment; or,
• 55 years old, and make below a certain income level that changes from time to time

This may seem simple, but what exactly is “disabled?” What does “as a result of?” What is the income level, and which time period is measured?  Also, a good thing about the $175,000 California homestead exemption is that it would extend to the spouse of the person filing Chapter 7. So if the debtor is, say, 63 years old, but their husband is 67 but really doesn’t want to file bankruptcy, the 63 year old who does file Chapter 7 bankruptcy gets the $175,000 homestead exemption in California anyway.

In the right circumstances, someone filing consumer bankruptcy can protect a lot more house equity under this third option, which is less than the minimum after the law changed in 2021.

The new California Homestead Exemption starting in 2021

Then, in 2021, the California homestead exemption increased dramatically. This provided tremendous relief to California homeowners. What this means to the person contemplating filing bankruptcy is that more of their home equity can be protected. Why?  Because they really do take houses in Chapter 7 bankruptcy.

Previously, the amount of home equity which could be protected was inadequate and hardly kept up with the inflated Calif real estate. But then in 2020, COVID-19 struck, and people were suddenly unable to pay their rent and mortgages. Partially in response to the pandemic, the state legislature passed and the governor signed a dramatic increase to the California homestead exemption.

The result is a system which depends upon the location where the house is, and has nothing to do with marital status or age. And this makes sense, as a homeowner in Ventura County probably has a higher home value than someone who owns a home in Lancaster CA. It’s now tied to the median home price for the previous year.

So, starting in 2021, homeowners who’ve lived at a home for 4 years or more get a minimum of $300,000 of home equity protection, and a maximum of $600,000 of California homestead exemption, based on what is, or was, mysterious data. What exactly is the county median home price? In Los Angeles and Orange County, a consensus slowly formed about the amount of the Los Angeles County median home price. And it changes each year (more on that below).

But be warned: if you haven’t lived there that long (and there are other factors which could jeopardize the new massive California homestead exemption), you don’t even get the $300,000 minimum.

 

 

You will want to consult with a qualified bankruptcy attorney before you risk losing your house.

 

 

2023 California Homestead Exemption: Updated numbers for 2024

The 2023 homestead exemption amount adjusted starting on January 1, 2023.  Due to today’s historic inflation, the California homestead exemption in 2023 is higher than in 2022, which was higher than the the initial range of $300,000 to $600,000.

Why? CCP 704.730 (b) says: “The amounts specified in this section shall adjust annually for inflation, beginning on January 1, 2022, based on the change in the annual California Consumer Price Index for All Urban Consumers for the prior fiscal year, published by the Department of Industrial Relations.”  So let’s walk through the progression.

Warning: there are those who think that the CPI adjustment is applied only to last year’s median, and not last year’s adjusted number.  Or put differently, there is disagreement as to whether the CPI adjustments stack up, compounding other CPI adjustments, or go only to last year’s median. If the adjustment applies only the most recent year’s median, that will make this year’s homestead exemption significantly lower. Beware!

In 2021, the top limit for the California homestead was $600,000. Then, in June 2021, the CPI was 297.447, a 4.4% increase from the June the previous year. Applying that factor to the homestead amounts, that would increase both ends of the spectrum to $313,200 and $626,400. As inflation in 2022 is higher yet again, 2023 California homestead exemption will be even more than that.

Now, in 2023, we do the same thing all over again. With such high inflation recently at 8.27%, the 2023 California homestead exemption will be a little over $675,000. To be more precise, the 2023 inflation-adjusted range of the California homestead exemption is minimum of $339,189 and a maximum 2023 California homestead exemption of $678,378.

June 2023 update: Now, with the June 2023 CPI numbers available, we can calculate the maximum 2024 California homestead amount. The difference between the June CPI numbers is 3.1%. When we increase the 2022 maximum homestead number in the last paragraph by 3.1%, we arrive at a maximum 2024 California homestead exemption amount of $699,426, for cases filed after 1/1/2024.

Maximum California homestead exemption adjusted for CPI (by year)

Year	Minimum	Maximum	CPI new	CPI old	CPI delta	CPI %age
2021	$300,000.00	$600,000.00	297.447	284.835	0.044278	4.43%
2022	$313,283.48	$626,566.96	322.043	297.447	0.082690	8.27%
2023	$339,189.00	$678,378.01	332.035	322.043	0.031027	3.10%
2024	$349,712.99	$699,425.98		332.035
2025

Fun fact: Do you have to actually live at the home to get the exemption? For how long? Find out more here.

To see how these numbers are reached, check out our own custom calculator for county median home price to reach the homestead exemption after adjusting for inflation. This will be helpful for the many counties whose median home price is between these two numbers.

 

 

 

San Bernardino County homestead exemption for 2023

Let’s use an example to show how not-simple even a relatively simple county is. San Bernardino County remains a county whose median sales price has consistently remained between the minimum and maximum since the enactment of the new California homestead exemption. This makes it easy (well, easier) to figure its homestead exemption amount.

Where the challenge comes in is when a county was between the min and max, and then exceeds the max. To which value do you increase: the statutory maximum, the inflation-adjusted maximum, the most recent median, or the most recent inflation-adjusted median? One such county with this issue is Riverside, but we’ll put that aside for another day.

For 2023, the inflation-adjusted California homestead exemption for San Bernardino County appears, at a minimum, to be $514,283.  How? Because that takes the most recent median of $475,000 and increases it by only the most recently completed year’s inflation rate of 8.27%.

But there’s an argument that, if you combine the CPI inflation rate from both 2022 and 2023 and increase the median by 12.697%, the 2023 San Bernardino County homestead exemption is $535,311. Elsewhere in inflation-adjusted exemptions, and even in the CPI numbers themselves, each year or quarter increases the one before it, not only the base.

Different yet again is instead of just increasing the latest median by the combined CPI inflation rates, that the previous year’s adjustments are added. This would result in a slightly different number, as previous year’s percentages were applied to smaller numbers, not today’s larger one. Doing that for 2023 for San Bernardino’s inflation-adjusted homestead exemption is $533,096. Given that, there will likely be litigation and fighting over this topic in the years ahead as the spreads become wider. Use and litigate at your own risk.

San Bernardino County homestead exemption (adjusted)

Year	Adjustment	Median	Adj Median	Comb Adj Med	CPI new	CPI old	CPI delta	CPI %age
2021	$0.00	$348,000.00	$0.00		297.447	284.835	0.044278	4.43%
2022	$18,818.26	$425,000.00	$443,818.26	$443,818.26	322.043	297.447	0.082690	8.27%
2023	$39,277.92	$475,000.00	$514,277.92	$533,096.18	332.035	322.043	0.031027	3.10%

 

Be careful in Chapter 7 bankruptcy.  It’s not always the best type of bankruptcies.

 

Don’t go it alone

You really should consult to a qualified Los Angeles bankruptcy lawyer, as you get what you pay for, and it’s not worth risking your home. If you don’t do this right, you’re literally gambling with your house.

Schedule a Zoom consult with me, and let’s talk.