Understanding California Proposition 19: What Homeowners Need to Know
California Proposition 19, passed in November 2020, brought major changes to property tax rules that affect both homeowners looking to move and families inheriting property. If you’re buying or selling real estate in California that is your primary residence, it’s important to understand how these rules may impact you.
Key Benefits for Homeowners 55 and Older
One of the most significant aspects of Prop 19 is that it allows homeowners who are 55 or older, as well as those with severe disabilities or who have lost their home to a natural disaster, to transfer their property tax base to a new home.
You can transfer your existing property tax base to a new home anywhere in California.
- This can be done up to three times (previously, it was only once).
- The replacement home can be of equal or lesser value, or even more expensive—though if it’s more expensive, the difference in value will be added to your tax base.
This makes it easier for long-time homeowners to downsize, move closer to family, or relocate without facing a big jump in property taxes.
Inherited Properties
Prop 19 also tightened rules for family property transfers. Before, parents could transfer a primary residence or other property to their children without a significant reassessment of property taxes.
Now:
- A property passed from parent to child (or grandparent to grandchild if the parent is deceased) must become the child’s primary residence to keep the lower property tax base.
- Even then, only the first $1 million above the current taxable value is excluded from reassessment.
- Vacation homes and rental properties generally no longer qualify for this tax break.
This has major implications for families who inherit homes along the coast or other high-value areas—especially if they don’t plan to live in the property themselves.
What This Means for Buyers and Sellers
For buyers and sellers in coastal Sonoma and Mendocino Counties (and beyond), Prop 19 can create opportunities and challenges:
- Sellers who qualify under the age/disability rules may feel more comfortable listing their home, knowing they won’t face a large property tax increase on their next purchase.
- Buyers inheriting property should carefully consider whether they plan to live in the home, as higher property taxes could significantly affect affordability.
As a brokerage, we help our clients navigate these rules and explore strategies to make the most of their real estate options under the new law.
Resources for More Information
For those who want to dive deeper, here are some reliable resources:
California State Board of Equalization – Proposition 19 Information
Final Thoughts
Proposition 19 was designed to create flexibility for older homeowners while limiting tax breaks on inherited properties. Every situation is unique, and the details can be complex—especially when it comes to family transfers.
If you’re considering selling, buying, or transferring property under Prop 19, our team at Kennedy & Associates is here to guide you through the process and connect you with tax and legal experts when needed.
