California Homestead Exemption Guide: Selling a Home When Money Is Tight

Last updated November 13, 2026. Reviewed by the Cash Home Buyers CA team. Based on California Code of Civil Procedure section 704.730 as published by the California Legislature; sources are listed at the end.

California’s homestead exemption protects part of the equity in your home from creditors, and under Code of Civil Procedure 704.730 the amount is the greater of $300,000 or the countywide median single-family sale price for the prior year, capped at $600,000. Those dollar figures adjust each year for inflation, so the current amount is higher than the base numbers in the statute.

This guide explains the formula, how it connects to selling your house in California, and why anyone considering bankruptcy should talk to an attorney first. It does not summarize bankruptcy rules themselves.

The California homestead formula (CCP 704.730)

What does the homestead exemption protect?

The exemption shields up to a set amount of your equity in the home from a forced sale to pay creditors. Equity is the home’s value minus what you owe on mortgages and liens. If your equity is under the exemption amount, the exemption can cover all of it.

If your equity is higher, the part above the exemption is exposed. Because the amount depends on your county’s median price and moves with inflation, look up the current figure rather than relying on the base numbers.

How the exemption relates to selling

If you sell, escrow pays off mortgages and liens from the proceeds and you receive the rest. The homestead exemption is a rule about protecting equity from creditors; it is not a number that changes what a buyer pays you.

When creditors, tax debts or a possible bankruptcy filing are in the picture, the timing of a sale can matter. A sale before a filing and a sale during a bankruptcy are treated differently, and those rules are outside what this guide covers.

• Get your payoff figures for every mortgage and lien before you choose a path.
• Ask an attorney how your homestead amount applies to your equity.
• Do not sell or transfer the home to a relative to avoid creditors without legal advice.

How to sell a house in California when money is tight

1. List what you owe. Include mortgages, home equity loans, tax liens and judgment liens.
2. Estimate your equity. Subtract the total owed from a realistic value.
3. Look up your county’s current exemption. The statute’s base figures are $300,000 and $600,000, adjusted yearly.
4. Talk to an attorney. A bankruptcy or debt attorney can tell you how a sale fits your situation.
5. Compare sale options. A direct cash offer can close on a short timeline and pay off liens through escrow.

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Homestead exemption FAQ

How much is the California homestead exemption?

Under CCP 704.730 it is the greater of $300,000 or the prior year’s countywide median single-family sale price, capped at $600,000, with yearly inflation adjustments since January 1, 2022.

Does the amount change every year?

Yes. It adjusts annually using the California Consumer Price Index for All Urban Consumers, rounded to the nearest $25.

Does my county matter?

Yes. The statute uses the countywide median sale price for a single-family home in the prior calendar year.

Will the homestead exemption change what a buyer pays me?

No. It protects equity from creditors; the sale price comes from the market and your buyer.

Should I talk to a lawyer before selling if I owe creditors?

Yes. Timing and how a sale interacts with debts or a bankruptcy filing are legal questions for an attorney.

Sources

• California Legislature: Code of Civil Procedure section 704.730

This guide is general information, not legal advice. Confirm the current exemption amount and how it applies to you with a California attorney.