Prop 19 EXPLAINED: How California Law Impacts Homeowners and Real Estate Heirs

About Prop 19:

• Effective April 1, 2021, allows homeowners 55 or older, those with severe disabilities, and victims of wildfires and natural disasters to transfer their tax assessments anywhere within the state of California to a primary residence of equal value with no property tax increase, or a more expensive primary residence with an upward adjustment within two years of the sale of the original primary residence. This will eliminate the big jump in property taxes homeowners who are 55 years or older would otherwise face.
• Increases the number of times that these eligible homeowners can transfer their tax assessments from one to up to three times.
• Effective February 16, 2021, requires that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred to children or grandchildren.
• Children who inherit their parents’ home, but only intend to keep it as a second home or rent it out, would see a big increase in property taxes under Proposition 19. Further, when the inherited property is used as the recipient’s principal residence but has a market value of $1 million more than the property’s taxable value, an upward adjustment in assessed value would occur.
• Currently, under Propositions 58 and 193, primary residential homes are not reassessed when transferred to heirs, so any property that is benefitting from the low tax rates created by Proposition 13 would continue to benefit if a parent passes the property to a child or grandchild. Rental properties or vacation homes can also currently be transferred from parent to a child or grandchild with the first $1 million tax basis exempt from re-assessment when transferred.