When we talk about real estate, we often think in the present—what’s on the market, how the numbers are shifting, where interest rates are heading. But there’s another conversation that’s just as important: what happens when life changes.
Maybe your kids have moved out and you’ve become empty nesters, wondering if it’s time to downsize or finally move to that town you’ve always dreamed about—but you’re not sure you want to give up the low property tax base you’ve held onto for years. Or maybe you’re thinking ahead to what happens when property is passed down to the next generation, and how to make sure it stays in the family—and stays affordable.
For many families in San Diego and across California, property is one of the most valuable assets they’ll ever own. Maybe it’s the home you raised your kids in, or the beach house your family’s returned to every summer.
But since the passage of Proposition 19 in 2020, those plans have changed. The law reworked how inherited homes are taxed—and also expanded benefits for homeowners over 55, those with disabilities, or victims of natural disasters looking to transfer their tax base when moving.
What Is Prop 19?
Proposition 19, passed by California voters in 2020, made two major changes to property tax rules:
1. Expanded Property Tax Portability
Prop 19 allows eligible homeowners—those 55 or older, severely disabled, or victims of natural disasters—to transfer the property tax base of their current home to a new primary residence anywhere in California.. According to the California Association of Realtors:
“Qualified homeowners can transfer their existing property tax base to another property regardless of the cost of the replacement home (with an adjustment upward to their tax basis if the replacement property is of greater value).” (CAR, PROP 19)
In other words, if the new home is more expensive than the one you’re selling, you’ll still get to transfer your original tax base—you’ll just pay the difference in property taxes on the amount above your old home’s value. If the new home is the same price or less, your tax base transfers directly.
2. Changed the Rules for Inherited Properties
Before Prop 19, children (or grandchildren) could inherit a property and keep the original property tax base the parents had, regardless of whether they lived in it or used it as a rental.
Now, the rules are tighter. To keep the original low property tax base under Prop 19, the inheritor must move into the home within one year, make it their primary residence, and ensure the new assessed value is no more than $1 million above the original tax base.
If the value exceeds that $1 million threshold, the property will be partially reassessed—meaning you’ll pay higher taxes on the amount above that $1 million mark.
What Does This Mean for You?
Good News for Downsizers and Those Moving Later in Life
f you’re 55 or older, severely disabled, or a victim of a wildfire or natural disaster, Prop 19 allows you to transfer your existing property tax base to a new primary residence—anywhere in California.If your new home costs the same or less, your current tax base transfers with you. If the new home is more expensive, your new tax base will be the original value plus the difference in price between the two properties. This is a major improvement from the previous rules, which limited transfers by county and allowed them only once.
Here’s a A Local Example:
You’ve owned your home in Del Mar for decades and originally bought it for $1 million. Now that the kids are out, you’re ready for a change—maybe a coastal bungalow in Laguna Beach. Under Prop 19, as long as you qualify, you can bring your current tax base with you. If the new home costs more, your tax base would adjust upward based on the price difference—giving you more flexibility to move without starting over with a much higher property tax bill.
Important Changes for Families Inheriting Property
Under the old rules, children could inherit a home and continue paying their parents’ low property taxes—even if they used it as a rental or second home. But Prop 19 changed that.
Now, families can only keep the lower tax base if the heir moves into the home within one year, makes it their primary residence, and the increase in assessed value is no more than $1 million above the original base. If the home has appreciated beyond that, the portion over the $1 million cap will be reassessed at current market value, resulting in a higher annual tax bill.
This change is especially important in high-value areas like La Jolla, Del Mar, Encinitas, and Rancho Santa Fe, where many long-held homes have significantly increased in value over the years.
Here’s A Local Example:
Let’s say you bought a home in La Jolla in 2000 for $900,000, and today it’s worth $3 million. If the home is passed down to your kids and they wanted to preserve the original tax base, they would have to move in within one year and make it their primary residence. But since the home’s value has increased by more than $1 million, only that first $1 million over the $900,000 would be excluded from reassessment. The rest would be taxed at today’s market value.
Final Thoughts
Prop 19 brought some big shifts—depending on your situation, they might work in your favor or come with a few surprises.
If you’re thinking about downsizing, there could be real savings. If you’re hoping to keep a property in the family, a little planning can go a long way—especially in places like La Jolla or Del Mar where values have gone up.
Wherever life takes you, and whatever you’re planning for, we’re here for you and your real estate needs.
Disclaimer:
We’re not attorneys or tax advisors—just local real estate professionals sharing what we’ve learned and how we’ve come to understand Proposition 19. This blog is meant to give a general overview and should not be considered legal or financial advice. Prop 19 is a constitutional amendment, and there are still ongoing updates and clarifications happening at the state level. If you’re making decisions about inheritance, downsizing, or tax planning, we always recommend connecting with a qualified estate planner or attorney who can walk you through the specifics of your situation.