In California, your property tax is based on what you paid for your home, not what it is worth today. If you bought 20 years ago, your tax bill is probably a fraction of your neighbor's who bought last year.
That is why so many longtime homeowners stay put. Moving means losing that low tax base. Prop 19 changed that for some homeowners, and it also changed what happens when you inherit a home. Here is how it works.
If you are 55 or older: you can take your tax base with you
Since April 1, 2021, homeowners 55 and older can sell their home and transfer its taxable value to a replacement home. Severely disabled homeowners of any age, and homeowners whose homes were destroyed by a wildfire or declared disaster, qualify too.
The rules:
Anywhere in California. The replacement does not have to be in San Diego County.
Up to three times. Not a one-time benefit.
Within two years. Buy the replacement within two years before or after selling the original.
Primary residence only. Both homes must be your primary residence and eligible for the homeowners' exemption.
What if the new home costs more? You still get the benefit. The difference in price is added to your transferred value.
Here is the State's own example. Your current home is worth $600,000 and taxed at $300,000. You buy a $700,000 replacement. Your new taxable value is $400,000, not $700,000.
If the new home costs the same or less, your old taxable value transfers as is. There is also a small cushion: if you buy within a year after selling, the replacement can cost up to 105% of your sale price with nothing added. In the second year, that goes up to 110%.
How to claim it: File form BOE-19-B with the County Assessor in the county where the new home is. You have three years, but file as soon as you close.
If you inherit a home: the rules are much stricter now
This is where most families get caught off guard. Before February 16, 2021, a parent could pass any home, including a rental, to their children and keep the low tax base. That is gone.
Today:
Only the family home qualifies (or a family farm). A rental or vacation home inherited from a parent gets reassessed to market value.
The child must move in. The home has to become the child's primary residence within one year, and they must file for the homeowners' exemption within that year.
There is a value cap. The exclusion covers the parent's taxable value plus about $1 million. For transfers from February 16, 2025 through February 15, 2027, that amount is $1,044,586. Any market value above that cap is added to the taxable value.
Using the State's example: a home taxed at $300,000, with a market value of $1.5 million. The cap is $300,000 plus roughly $1 million. The amount above the cap gets added, so the child's taxable value rises to about $500,000. That is still far below $1.5 million.
The same rules apply from grandparents to grandchildren, but only if the grandchild's parent has passed away.
How to claim it: File form BOE-19-P with the County Assessor within three years of the transfer, and file for the homeowners' exemption within one year.
Why this matters in San Diego
With home values where they are, the difference between your current tax base and today's market value can easily be thousands of dollars a year. For a 55+ homeowner thinking about downsizing, or moving closer to the grandkids, Prop 19 can make the move work financially. For families planning an estate, the one-year move-in rule and the rental exclusion can mean a large tax increase if no one plans ahead.
Bottom line
If you are 55 or older and staying put only because of your property tax, run the numbers. You may be able to move and keep most of your tax savings. If you expect to inherit a home, or plan to leave one to your kids, talk to an estate attorney now, not after the fact.
Thinking about a move and want to see what Prop 19 means for you? Send me a note.
Sources:
California State Board of Equalization: Proposition 19 Fact Sheet (Publication 801)
California State Board of Equalization: News Release 25-02, Prop 19 exclusion adjustment
Bassem Elsayeh
REALTOR® | REeBroker Group | CA DRE #01901933
This post is general information, not tax or legal advice. Consult a tax professional or estate attorney about your situation.