California Homeowner Exemption: Everything You Need to Know
As a homeowner in California, it's important to understand all the tax benefits available to you. One of the most prevalent, and least taken advantage of by property owners, is the California Homeowner Exemption. In this post, we'll go over everything you need to know, including what it is, how much it saves you, and how to receive the benefit.
What is the California Homeowner Exemption?
The California Homeowner Exemption has been in place in California since 1968. There are millions of homeowners in California who have filed for this benefit. The exemption is available to all properties where the owner occupies the property as their primary residence. In order to receive the benefit, you must occupy the home for more than 180 days per year, and by January 1st on a given tax year. This means that if you move into your home on January 2nd, you won't be eligible for the exemption until the following year.
It's important to note that the exemption only applies to your primary residence, not any additional properties you may own. You can only claim the exemption for one property at a time.
How much does the California Homeowner Exemption lower my property taxes?
The California Homeowner Exemption reduces the taxable value of your primary residence by $7,000. This means if your home is valued at $500,000, the exemption would reduce the taxable value to $493,000. If your county's tax rate is 1%, this would save you $70 on your property taxes for the year.
The tax rate for California counties varies between 1% and 1.3% of your taxable value, meaning the exemption will save you between $70 and $90 every year, depending on the county where you live.
This exemption is valid every year the property remains your primary residence. Meaning if you live in the home for 25 years, the exemption could save you ~$2,000 over time.
Once you've applied, there is no need to reapply each year. However, if the property no longer becomes your primary residence, you need to file a notice to your county to remove the exemption. Failure to timely file a notice with the city will resort in a retroactive bill.
Why does the exemption only reduce my taxable base by $7,000?
The exemption was originally designed to reduce a homeowners property tax bill by 20%. When the exemption was put in place in 1974, the average California home was worth $35,000. This means its value has significantly decreased over time, as home prices in California have increased dramatically over the last 50 years. Legislators have attempted to increase the exemption in recent years to keep pace with the price of housing, but so far, no changes have been made.
How do I file for the exemption?
There are two ways to apply for the homeowner exemption:
- File automatically with Parcel: Request a free tax savings analysis below, and one of our tax specialists will help you automatically identify savings opportunities for your home and file the appropriate paperwork, including for the California Homeowner Exemption. The process typically takes less than 5 minutes.
- File manually: Typically the required forms can be found with your county assessor's office. You will need to fill out, sign, and mail in the correct paperwork to receive your exemption.
Questions? We're here to help. Take 2 minutes to get a free savings analysis on your property provided by one our California property tax specialists. .
