Homestead Exemption in California
What is Homestead Exemption?
No one wants to file bankruptcy for fear of losing their belongings. There are some exemptions however that help to keep your home and other larger property. The Homestead Exemption is a clause that was created to help prevent a home from being seized by a debt collector in the event of the death of one spouse or filing bankruptcy.
This helps you to stay in your home even if you do have to file bankruptcy and allows the homeowner to reaffirm their home loan and keep paying on it if they have one or keep their property debt free if they already own it. In most cases, each state has a threshold of value that the home cannot exceed before it qualifies as assets and must be sold.
Homestead Exemption in Bankruptcy
When it comes to bankruptcy, one of the biggest protections that you have is the Homestead Exemption. Creditors can force the sale of nearly anything that you own in an attempt to get their money back.
This means that they can force the sale of cars, furniture, electronics and more and in some cases, they can force the sale of homes and other property. In most states there is a predetermined amount that the home or the property cannot exceed before you are required to downsize and use the extra money to pay back your creditors.
Homestead Exemption Law in California
In the states of California you can use the Homestead Exemption to help you with a range of different financial issues. You can use it to help provide some relief from property taxes. When you use this exemption you can only be taxed the amount that the property is worth minus the exemption amount to make sure that people are not being charged too much for property taxes. This exemption is also helpful in terms of bankruptcy in the state of California.
In California it helps to protect your property from being seized and liquidated to pay back creditors. When it comes to the amount, your home can be worth $75,000 for a single person, you can own a home worth $100,000 for a family and seniors can have a home that is worth $175,000 before you are required to sell the home and give back some of the money.
These laws are always being adapted and changed based on the current economy and the current state of the world so that you can get the best exemption possible and you can make sure that you are not going to have to deal with problems down the road.
New California Homestead Exemption Amount
Since these laws are always begin changed and updated, it is always helpful to look at the most recent amounts that are posted. Today, the exemption has been changed and the previous $175,000 maximum has been changed to $300,000 of the sale price of a home. It can be more depending on the county in which you live up to $600,000. In many cases this will not affect homeowners that are not applying for the exemption for tax or bankruptcy purposes. If you do file a homestead exemption it may change the way that your home was previously counted.
For those using the homestead exemption as a means of helping to relieve taxes and property tax burden, the new act will go based on the value of your home from the year before rather than the current market value. The law was changed as well to help more people qualify for bankruptcy and for less people to be excluded based on the value of their home. This increase allows for a greater protection for those that have more expensive homes and that still need to file for bankruptcy.
How to File Homestead Exemption in California?
When it comes to getting the exemption not all people are going to benefit from it. If you have a home that you do not own and that you have no equity in, for example, this type of exemption is not going to do much for you.
If you do have a home that has equity and you have trouble financially it is going to be beneficial to file as it will protect that equity. In order to file it is always helpful to get an attorney that can help you to go through the process and be certain that all pertinent information is provided and that your filing is complete so that it does not get rejected.
How Do I Qualify for Homestead Exemption in California?
In order to qualify for the exemption you do need to own a home that has some equity in it. You cannot file this exemption, and really do not need to, if you have a home that you have no equity in as you can reaffirm your loan and just keep paying. If you are a single person and you own a home that has equity in it you can have equity up to $300,000.
If you are a family that amount goes up to at most, $600,000. You do need to have some equity that can be liquidated in a home in order to be able to qualify.
You can apply for the exemption that will then protect your home so that your creditors cannot force the sale of the home in order to pay back your debts.
When it comes to filing this sort of exemption, it is always best to get an attorney that knows the ins and outs of bankruptcy law so that you can get the best options possible and so that you can get your home fully protected in the event that you do need to file for bankruptcy.