California Real Estate Practice Exam

How long do homeowners have to reinvest the protected equity from the sale of their home to benefit from the homestead exclusion?

1. Three months

2. Six months

3. One year

4. Two years

The correct answer is: Six months

Homeowners have six months to reinvest the protected equity from the sale of their home in order to benefit from the homestead exclusion. Option A is too short as three months may not give homeowners enough time to find a new property and go through the necessary steps for reinvestment. Option C and D are both too long as one year and two years may give homeowners too much time to find a new property and potentially lose out on the benefits of the homestead exclusion. Therefore, the most reasonable and accurate option is B, which strikes a balance between not rushing homeowners and not giving them too much time to potentially miss out on the benefits.