Practice area
Proposition 19 is the reason families sell the house they meant to keep.
It changed how property tax is reassessed when a home passes from parent to child. For San Diego families holding property bought decades ago, the difference between planning for it and not can be tens of thousands of dollars a year.
Feb 16, 2021
The date the narrower rules took effect.
Principal residence
The child generally must live there for the exclusion to apply.
Value cap
Protection is limited; excess value is reassessed.
Plan while living
Most options close on death.
What changed in February 2021
Before Proposition 19, a parent could transfer a home to a child and the child kept the parent's Proposition 13 assessed value. A house bought in 1992 and worth $1,400,000 today kept being taxed on something closer to its 1992 value. That exclusion was broad, and it applied whether the child lived there or rented it out.
Since February 16, 2021, the exclusion is far narrower. The child must make the home their own principal residence and file for the homeowners' exemption within the statutory window. Even then, the protection is capped: value above the cap is added to the assessment.
What it looks like in practice
A long-held San Diego home can carry an assessed value a fraction of its market value. When the exclusion does not apply, that property is reassessed to current market value, and the annual tax bill can multiply several times over.
Heirs who intended to keep the home as a rental, or to share it among siblings where only one will live there, are the most exposed. Frequently the new tax bill simply exceeds what the property generates, and the family sells.
What planning can still do
The options depend heavily on your family's specific facts: who will actually live in the home, whether there are multiple children, whether the property produces income, and how the title is currently held. Some approaches involve how and when transfers occur; others involve entity or trust structures.
The one thing that is consistently true is that most of these options require action while you are alive. After death, the range of what remains available narrows sharply.
Common questions
Proposition 19 Planning
Does Proposition 19 apply if my child inherits through a trust?
Yes. Proposition 19 looks at the change in ownership, not the instrument used. Passing the home through a trust avoids probate, but it does not by itself avoid reassessment.
What if two of my children inherit and only one lives there?
This is one of the most common problem patterns and the answer depends on the specific ownership structure. It is worth analyzing before the transfer rather than after, because the flexibility largely disappears at death.
Did Proposition 19 give anything back?
Yes. It expanded the ability of homeowners aged fifty-five and older, and those who are severely disabled or lost a home to a wildfire or disaster, to transfer their assessed value to a replacement home anywhere in California, and to do so more than once.
Related
Other areas of the practice
Talk it through with an attorney.
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