Homeowners exemptions and Homesteads

Homeowners’ Exemption vs. Homestead Exemption in Santa Clara County: What Every Homeowner Should Know

If you own (or are about to buy) a home in Santa Clara County, you’ve probably heard people mention the “homeowners’ exemption” and the “homestead exemption.”

They sound almost identical—but they do very different things.

As local real estate agents who live and work in this area every day, we see homeowners mix these up all the time. This post breaks down both in clear, simple language so you know what benefits and protections you might be missing.

Quick Snapshot

• Homeowners’ Exemption

  A small property tax discount for owner-occupied homes.

• Homestead Exemption

  A legal protection that can shield a chunk of your home equity from certain creditors and in some bankruptcy situations.

They are not interchangeable, and you can potentially benefit from both.

1. Homeowners’ Exemption: A Small But Easy Property Tax Savings

The Homeowners’ Exemption is a statewide program, administered locally by the Santa Clara County Assessor.

What it does

• Reduces the assessed value of your primary residence by a set amount (currently $7,000).

• Since property tax is roughly 1% of assessed value (plus local bonds/assessments), most homeowners save about $70–$80 per year on their tax bill.

It’s not huge money, but it’s the kind of thing that’s worth taking 5 minutes to file—especially if you’ll be in the home for many years.

Who qualifies?

You generally qualify if:

• You own the property,

• You live in it as your principal residence, and

• You’re not claiming a homeowners’ exemption on any other property in California.

How to get it in Santa Clara County

1. File the form (Homeowners’ Property Tax Exemption / BOE-266) with the Santa Clara County Assessor’s Office.

2. You can usually file online or by mail.

3. Once approved, it typically rolls over automatically each year, as long as the home remains your primary residence.

When to update the Assessor

You should notify the Assessor if:

• You move out and no longer live there,

• You rent the property instead of occupying it, or

• You sell the home.

That keeps your tax record clean and helps you avoid penalties or escape assessments.

2. Homestead Exemption: Protecting Your Home Equity

The Homestead Exemption is completely different.

This is not a property tax break and has nothing to do with the Assessor’s Office.

Instead, it’s a legal protection under California law that can shield a portion of your home equity in your primary residence from certain creditors and in some bankruptcy situations.

Think of it as a safety cushion around part of your equity, not a discount on your tax bill.

How much equity is protected?

California sets the protection amount based on:

• A statewide minimum and maximum range, and

• The county’s median home price,

• Adjusted each year for inflation.

Because Santa Clara County has one of the highest median home prices in the state, the protected equity amount here is at the higher end of that range (currently roughly in the low-to-mid $700,000 range for many homeowners).

⚠️ Important: the exact homestead amount changes over time and can depend on your specific circumstances. For precise planning, always confirm current numbers with a qualified attorney.

Two versions: automatic vs. declared homestead

1. Automatic homestead protection

• If you own and live in your home as your primary residence, you generally receive homestead protection automatically under California law.

• This protection comes into play when a judgment creditor tries to force the sale of your home or in certain bankruptcy cases.

• Up to the protected homestead amount of your equity may be shielded from being used to satisfy qualifying judgments.

2. Declared homestead (recorded)

• You can optionally record a Homestead Declaration with the Santa Clara County Recorder’s Office.

• The dollar amount of protection is generally the same as the automatic homestead, but a recorded homestead can offer extra benefits, such as:

  • Protecting sale proceeds (up to the homestead amount) for a period of time after you voluntarily sell your home, while you reinvest those funds into a new residence.

Because recording a homestead declaration can affect legal and financial planning—especially if you have existing creditors—it’s smart to consult with a real estate or bankruptcy attorney first.

3. What the Homestead Exemption Doesn’t Do

There are some common misconceptions:

• It does not reduce your property taxes.

• It does not stop a foreclosure by your mortgage lender or a voluntary lien if payments aren’t made.

• It does not protect against all kinds of debts (certain tax liens, child/spousal support, and others may still reach your home or proceeds).

It’s a powerful tool, but not a magic shield.

4. Side-by-Side Comparison

5. What This Means for You as a Santa Clara County Homeowner

If you own or are buying a home in Santa Clara County, here’s the practical takeaway:

1. Make sure you’ve filed for the Homeowners’ Exemption

   It’s simple, one-time, and puts a little bit of money back in your pocket every year.

2. Understand your homestead protection

   2. • Know that a chunk of your equity is protected under state law if this is your primary residence.

      • If you’re concerned about lawsuits, judgments, or potential bankruptcy exposure, talk to an attorney about whether it makes sense to record a homestead declaration.

    Know that a chunk of your equity is protected under state law if this is your primary residence.

Being proactive about both can give you:

• Modest tax savings every year, and

• A significant level of financial protection around your largest asset—your home.

6. Final Thoughts (and a Friendly Disclaimer)

This post is for general information only and is not legal, tax, or financial advice. Laws change, and how they apply depends on your specific facts.

Before making decisions about:

• Filing or canceling a homeowners’ exemption,

• Relying on the homestead exemption,

• Recording a homestead declaration, or

• Filing for bankruptcy or restructuring debt,

please consult with:

• A qualified attorney, and/or

• A tax professional (CPA or enrolled agent).

Thinking about buying or selling in Santa Clara County?

We help homeowners and buyers navigate not just the transaction, but the bigger picture around property taxes, ownership, timing, and strategy.

If you’re planning a move, curious about your home’s value, or just want a thoughtful conversation about your options, reach out to us anytime.

David & Angela Bergman

Local Real Estate Agents – Santa Clara County & Surrounding Areas