Homestead · Beverly Hills
The California Homestead Exemption and How Yours Is Figured
The California homestead exemption protects equity in the home you live in, and yours is figured from your county's median home price, between a floor and a cap that rise with inflation. In Los Angeles County, homeowners get the top amount, estimated at about $744,000 in 2026. Call (310) 362-9071 and we will run your equity numbers with you.
- Found in Code of Civil Procedure section 704.730 (System 1)
- Base range of $300,000 to $600,000, adjusted for inflation since 2022
- Los Angeles County is at the top of the range
- System 2 home protection is only $36,750 (since April 1, 2025)
At a glance
How the homestead amount is set
The homestead amount is set by a formula in Code of Civil Procedure section 704.730. Your exemption is the greater of two numbers:
- The countywide median sale price for a single-family home in the prior calendar year, but not more than $600,000, or
- $300,000.
Those base numbers have been adjusted each year since January 1, 2022 for inflation, using the California consumer price index. The result is rounded to the nearest $25.
Here is the catch. No state agency publishes the adjusted figure. The Judicial Council has said it does not compute it. So the 2026 numbers are estimates based on the inflation formula: about $372,000 to about $744,000 in 2026. We use the current estimate when we review your case and explain how we got there.
Why Los Angeles County homeowners get the top amount
Los Angeles County gets the top amount because its median home price is far above the cap. A report on third-quarter 2025 sales put the county median above $950,000. That is well over the inflation-adjusted cap, so the cap applies.
For you, that means the county question is already answered. If you live in Beverly Hills, West Hollywood or anywhere else in the county, your homestead is the maximum, estimated at about $744,000 in 2026.
The homestead is part of System 1. To use it, you must choose System 1 for all of your property. Compare the two on our System 1 vs System 2 page.
How to do the equity math
Equity is what your home is worth minus what you owe on it. The homestead protects equity, not the full value of the house.
| Step | Example A | Example B |
|---|---|---|
| Fair market value | $1,500,000 | $2,000,000 |
| Minus mortgages and liens | $900,000 | $1,000,000 |
| Equity | $600,000 | $1,000,000 |
| Homestead (2026 estimate) | About $744,000 | About $744,000 |
| Equity left unprotected | None | About $256,000 |
In Example A, the equity fits inside the homestead. A trustee would have no reason to sell. In Example B, about $256,000 is exposed. In Chapter 7, a trustee could sell the home, pay you the homestead amount in cash and use the rest for creditors. In Chapter 13, you keep the home and pay creditors at least the value of that unprotected equity over the plan.
A trustee also counts the costs of a sale, like broker fees, which can shrink the exposed amount. Use honest, supported values. A low guess draws objections.
Limits to know about
Recently bought homes. Federal law caps the homestead for equity you gained by buying a home within 1,215 days (about 3 years and 4 months) before filing. The cap is a federal dollar figure that adjusts every three years. It does not apply to equity rolled over from a prior home in California.
Declared vs automatic homestead. You do not need to record anything to claim the homestead in bankruptcy. It is automatic for the home you or your family live in on the day you file. A recorded declaration of homestead is a separate tool that matters mostly outside bankruptcy, such as when a judgment creditor records a lien.
The System 2 homestead is small. Under System 2, home equity is protected only up to $36,750 (effective April 1, 2025). If you do not use it, the unused part adds to the wildcard exemption. That is why renters often pick System 2.
Homestead mistakes to avoid
- Using the full home value. The exemption covers equity. Subtract every loan and lien first.
- Assuming an online estimate is enough. The trustee may order an appraisal. Bring recent comparable sales.
- Paying down the mortgage right before filing. Moving cash into home equity just before filing can be challenged.
- Moving out first. The homestead protects the home you live in on the filing date.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on what you keep
- California bankruptcy exemptions: what you keep
- California Exemptions: System 1 vs System 2
- The California Homestead Exemption and How Yours Is Figured
- The California Motor Vehicle Exemption
- The Wildcard Exemption Under CCP 703.140(b)(5)
- Retirement Accounts, 401(k)s and Pensions in Bankruptcy
- The Tools of the Trade Exemption
- Household Goods, Jewelry and Personal Property
- Wages, Tax Refunds and Cash on Filing Day
Homestead exemption questions
How much is the California homestead exemption in 2026?
The California homestead exemption in 2026 is about $372,000 to about $744,000, depending on your county. The state does not publish the adjusted figure, so these are estimates based on the inflation formula. Los Angeles County is at the top amount.
Do I have to file a homestead declaration to use it in bankruptcy?
No, you do not have to file a homestead declaration to use it in bankruptcy. The exemption applies to the home you live in on the day you file. We list it on your schedules under the right code section.
What if my equity is more than the homestead?
If your equity is more than the homestead, Chapter 7 puts the home at risk of sale. Chapter 13 usually lets you keep it while you pay creditors the value of the extra equity over time.
Does the homestead protect a rental property?
No, the homestead does not protect a rental property you do not live in. It covers your residence. The System 2 wildcard may cover a small amount of other equity.
Can I keep my house in Chapter 7?
Yes, you can often keep your house in Chapter 7 if your equity fits inside the homestead and you stay current on the mortgage. See our guide to what you keep in bankruptcy for the full picture.
Free consultation
Find out if your equity is protected
Call (310) 362-9071 or send the form. Bring your mortgage statement and a recent value estimate and we will do the math with you.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.