What is a homeowner’s exemption and why is it $7,000?

December 11, 2020
Following a purchase or sometimes during the escrow signing process I am asked if buyers should apply for the $7000 Homeowner’s exemption from assessment.  This means that if your assessed value is X, it will be X-$7,000 once you file for the exemption.  And once you file it, it stays in place until you file another one or another owner files one on the same property. It takes just a few minutes and over the long haul it’s worth it.  
 
If historical memory serves, it goes back to the passage of the Jarvis-Gann Initiative (also known as Prop 13  back in 1978.  People argued that if you lived in a home the taxes should be lower than if you owned an investment.  At the time, $7000 was about 10% of value – more in some places – and this was settled upon as being a fair exemption for owners who occupied their home.  It might seem funny now, because this is less than 1% of most homes at this point but the $75/year or so adds up over time.  It might not quite be sushi money but it’s a couple of good lunches of burritos 🙂
 
In case you want to know more – 
 
Here is an explanation from the California State Board of Equalization.
 
Here is a better explanation from Carmen Chu, our SF Assessor.