California Proposition 19

What Homeowners and Families Need to Know

A Guide from The Crespillo Group

California Proposition 19 changed property tax laws in significant ways, creating new opportunities for some homeowners while limiting tax benefits for inherited properties.

If you're thinking about moving, helping aging parents relocate, or planning to pass property to your children, understanding Proposition 19 is essential.

Part 1: Property Tax Transfers for Homeowners

One of the biggest benefits of Proposition 19 is the ability for certain homeowners to transfer their existing low property tax base to a new home.

Who Qualifies?

You may qualify if you are:

✔ Age 55 or older

✔ Severely and permanently disabled

✔ A victim of a Governor-declared wildfire or natural disaster

What Does This Mean?

Eligible homeowners can transfer their current Proposition 13 tax assessment to a replacement primary residence anywhere in California.

This can result in substantial property tax savings when moving.

Previous Rule

Prior to Proposition 19, homeowners were generally limited to one transfer and only within certain counties.

Current Rule

Now eligible homeowners can:

✔ Move anywhere in California

✔ Transfer their tax base up to three times

✔ Purchase a home of equal, lesser, or greater value

Example

Current Home:

Market Value: $900,000

Assessed Value: $250,000

Property Taxes Based On: $250,000

Replacement Home:

Purchase Price: $1,100,000

Difference: $200,000

New Assessed Value:

$250,000 + $200,000 = $450,000

Instead of paying taxes on $1,100,000, you would pay taxes based on approximately $450,000.

This can create thousands of dollars in annual tax savings.

Part 2: Inherited Property Rules

Proposition 19 significantly changed the rules regarding inherited property.

Prior to Proposition 19, many children could inherit property and retain their parents' low property tax assessment, even if the property became a rental or vacation home.

That is no longer the case.

To Keep the Parent's Lower Tax Base:

The property must meet ALL of the following requirements:

✔ The property was the parent's or grandparent's primary residence

✔ The child or grandchild inherits the property

✔ The heir moves into the home

✔ The heir establishes the property as their primary residence within one year

The $1 Million Value Exclusion

Even if the heir moves into the property, there is a limit.

The inherited property's market value can exceed the current taxable value by up to $1 million and still retain most of the original tax base.

Any value above that threshold is added to the property's assessed value.

Example

Parent's Assessed Value:

$300,000

Current Market Value:

$1,500,000

Difference:

$1,200,000

Because the difference exceeds the $1 million exclusion by $200,000, that excess amount would be added to the taxable value.

New Taxable Value:

Approximately $500,000

This is still a significant tax savings compared to reassessment at full market value.

What About Rental Properties?

Under Proposition 19, the parent-child exclusion was eliminated for:

✘ Rental properties

✘ Vacation homes

✘ Commercial properties

✘ Properties not used as the heir's primary residence

These properties are generally reassessed to current market value upon transfer.

Why This Matters

Proposition 19 has become one of the most important estate planning and real estate considerations for California families.

It affects:

• Retirement planning

• Downsizing decisions

• Estate planning

• Family wealth transfers

• Investment properties

• Property tax obligations

Before Making Any Decisions

Every family's situation is unique.

Before transferring property, gifting real estate, creating trusts, or making inheritance decisions, consult with:

• A qualified estate planning attorney

• A tax professional or CPA

• Your local county assessor

• A knowledgeable real estate professional

Have Questions?

Whether you're considering downsizing, helping parents move, or planning for the next generation, understanding Proposition 19 can save your family thousands of dollars.

The Crespillo Group

Helping California homeowners make informed real estate decisions for over 30 years.

📞 Phone: 916-996-3777

📧 Email: mc@thecrespillogroup.com

Schedule a complimentary consultation to discuss your specific situation and options.