Arizona Homestead Laws

The Arizona homestead exemption protects a homeowner’s equity, but it doesn’t apply in all situations. It does not protect your home from foreclosure, and may not prevent a tax seizure or HOA lien. If you have more than one property, you may need to designate one as a primary residence in a bankruptcy.

Arizona homeowners considering bankruptcy should consult an attorney to help them designate their homestead property. This article reviews the basics of Arizona’s homestead laws.

Overview of Arizona Homestead Law

Under the Arizona Revised Statutes (ARS), property is automatically protected under the homestead law. Homeowners no longer need to file a declaration of homestead. The automatic exemption applies to one property per person or married couple. The exemption covers houses, condos, mobile homes, and similar real property.

The law protects the home’s equity up to $425,200 as of 2025. The amount changes annually for inflation. A 2026 law grants a full tax exemption to 100% disabled veterans and their spouses.

The homestead protection applies to any Arizona resident over the age of 18. The federal bankruptcy provision may require longer ownership of the property than residency.

Qualifying Properties and Limitations

Arizona’s homestead law protects equity, so there are no limits on the type of property or its use. Farms, ranches, and rural properties are covered as long as they are the primary residence and comprise a compact body of land. Very large commercial agricultural operations may differ.

Owners may live away from the property for up to two years without losing the homestead exemption. If the owner wishes to abandon the property, they may transfer the deed, file a declaration of abandonment or waiver, or permanently leave the state.

Exceptions to the Homestead Law

Arizona’s homestead law will not protect homeowners against all types of debt collection actions. Judgment creditors can reach past the homestead exemption for:

• Involuntary liens, such as a tax lien
• Consensual liens, such as mortgages or deeds of trust
• Some HOA assessment liens

The law does not protect any assets from refinancing your home, so a judgment lien can attach those funds in the event of a bankruptcy or foreclosure. The homestead law does protect the cash proceeds from the sale of the property up to the equity amount for either 18 months or until you establish a new homestead with the proceeds.

The nature of these transactions can become quite complex. Homeowners facing foreclosure or bankruptcy should consult a bankruptcy attorney before making any decisions about selling or transferring property.

Bankruptcy Basics and Arizona Homestead Law

Homestead laws help protect homeowners during bankruptcy by providing exemptions for the value of the home. In a bankruptcy, the trustee sells the debtor’s property to pay off judgment creditors. The trustee cannot sell exempt property.

The amount of equity is the home’s fair market value, less any liens and encumbrances. If the fair market value is $600,000 and you currently owe $350,000 on the mortgage, your home equity is $250,000. The homestead law prevents creditors from forcing you to sell your home to obtain that $250,000.

If you voluntarily sell your home or sell it just prior to bankruptcy, the homestead law protects the sale proceeds for either 18 months or until you create a new homestead with the money. The purpose of this asset protection is to ensure you are not made homeless by bankruptcy.

Get Legal Advice From an Arizona Real Estate Attorney

Arizona state law protects your homestead property if you face foreclosure and/or bankruptcy. Since the exemption amount changes each year, speaking with a real estate or bankruptcy attorney in your area when making any legal decision about your property or your finances is a good idea.