If you've inherited a California home recently — or you're a homeowner thinking about what you'll leave behind — Proposition 19 is probably the most important real estate law you haven't fully gotten your head around.
It passed in November 2020, took effect in February 2021, and quietly ended one of the most valuable property tax protections California homeowners had counted on for 35 years. Most people didn't find out until they were already past the deadline to do anything about it. Here's what changed, what the current rules actually are, and what your options look like now.
This article is for general informational purposes only and isn't legal or tax advice. Every estate is different. For guidance specific to your situation, it's worth speaking with a licensed estate attorney or tax professional.
What Prop 19 Actually Changed (The Short Version)
Before Prop 19, California children could inherit their parents' home — and the parents' low property tax base — with virtually no restrictions. A parent paying $3,000 a year in property taxes on a home now worth $1.5 million could pass that $3,000 tax bill to their child along with the house.
Prop 19 ended that. Under the new rules, the property tax exemption for inherited homes is narrower, conditional, and capped. Miss any one of the conditions and the property gets fully reassessed to current market value — which in most California markets means a dramatically higher annual tax bill.
The Old Rules: What Prop 58 Used to Allow
Under Proposition 58 (in effect from 1986 through February 15, 2021), a parent could transfer their primary residence to a child with no reassessment and no dollar limit. They could also transfer up to $1 million in assessed value of other real property — rental homes, vacation properties, investment properties — with the same protection.
What that meant in practice was that heirs in high-cost California markets could inherit properties with decades-old assessed values worth a fraction of current market value. A home purchased in 1978 for $80,000, now worth $2 million, could be inherited with property taxes still based on something close to the original purchase price.
The California Board of Equalization's Prop 19 comparison notes that Prop 58 allowed transfer of a principal residence with no value limit, and transfer of other real property up to a transferor lifetime limit of $1,000,000 of factored base year value.
The New Rules: What Prop 19 Replaced It With
Proposition 19 took effect February 16, 2021. It changed the rules for inheriting California real estate in ways that most heirs still don't fully understand — often not until they're already dealing with the consequences.
Under Prop 19, the parent-child exclusion still exists — but it now comes with three strict conditions, all of which must be met.
1. The transferred property must have been the parent's primary residence.
The home being transferred must have been the parent's principal residence at the time of transfer. A rental home, vacation home, or investment property does not qualify, regardless of what the child does with it afterward.
2. The child must make it their primary residence within one year.
The child receiving the property must establish it as their primary residence within one year of the date of transfer — not intend to move in, not start the process, but actually live there as their primary home within 12 months.
3. The exclusion is capped.
Even if both conditions above are met, the exclusion only protects the first $1,044,586 of difference between the parent's assessed value and the current market value. Anything above that cap gets reassessed.
The $1,044,586 Cap — What It Means in Real Numbers
The cap isn't a fixed figure. The BOE recalculates this figure every two years based on the Federal Housing Finance Agency's House Price Index for California. The current figure of $1,044,586 applies from February 16, 2025 through February 15, 2027. Check boe.ca.gov/prop19 for the current figure after that date.
Two examples make it concrete.
A parent's home has an assessed value of $300,000 and a current market value of $1,000,000. The difference is $700,000 — under the cap. The child moves in within a year, files the claim, and the assessed value stays near what the parent was paying. Property taxes are largely protected.
Now change one number: same home, but market value is $1,600,000. The difference is $1,300,000 — about $255,000 over the cap. The child's new assessed value becomes the parent's $300,000 plus $255,000 = $555,000. Property taxes are higher than before, but meaningfully lower than a full reassessment to $1,600,000.
In the most expensive California markets — coastal LA, the Bay Area, San Diego — many inherited homes blow past the cap entirely, resulting in near-full reassessment even for heirs who do move in.
What Happens to Rental Properties, Vacation Homes, and Investment Properties
This is where Prop 19 hits hardest — and where the decision to sell often becomes obvious.
Under the old rules, a parent could pass a rental property with its original low assessed value intact. Under Prop 19, that protection is gone entirely. Rental properties inherited today face a full reassessment to current fair market value. For a rental with an assessed value of $ 280,000 and a current market value of $1,500,000, the annual property tax can jump from roughly $3,400 to over $18,000. That math fundamentally changes whether holding the rental makes financial sense.
For heirs inheriting a non-primary-residence property, the decision of whether to keep it or sell it just became more financially clear. If you're a landlord ready to exit, learn more about how a Wedgewood Homes cash offer works for rental properties.
The One-Year Clock
For heirs who want to claim the exclusion on a primary residence, the clock starts at the date of transfer — not the date probate closes, not the date you become aware of the inheritance. One year from transfer.
The detail that catches most people off guard is this — California probate typically takes 12 to 18 months. In many cases, the one-year Prop 19 window closes before probate does. If the property is still in probate, it's worth asking your estate attorney whether you can establish residency before the estate formally closes. If you're navigating the probate process at the same time, our guide to the California probate process covers the timeline in detail.
If there are multiple children inheriting the property, only one of them needs to live in it for the exclusion to apply to the entire property. That's a meaningful detail for heirs with siblings — one person moving in can protect the tax base for everyone.
The required form is the Claim for Reassessment Exclusion for Transfer Between Parent and Child (Form BOE-19-P), filed with the county assessor where the property is located. Filing for the homeowners' exemption must happen within one year. The exclusion claim itself can be filed within three years of transfer or before sale to a third party — but filing late only provides protection from the date of filing forward, not retroactively. Filing on time is the only way to get full protection.
If You're a Parent
Prop 19 doesn't mean estate planning options have disappeared — it means they've changed. A few areas worth bringing up with an estate planning attorney.
Ask about a living trust with Prop 19 compliance language. A properly structured trust may help heirs navigate the filing requirements and one-year timeline more smoothly. It doesn't change the rules, but it can make following them significantly easier — worth asking whether it makes sense for your situation.
Ask about the carrying cost picture for your heirs. For high-value California properties, the question isn't just whether your child can inherit the home — it's whether the ongoing tax bill would be financially manageable for them. An estate planning attorney or financial advisor can help you look at whether a sale with proceeds going to heirs might be more practical than an inheritance that comes with a substantially higher carrying cost.
If You've Already Inherited
If you've recently inherited a California property, the core question is whether it makes financial sense to keep it — and that calculation changed when Prop 19 took effect.
Some questions worth exploring with an estate attorney or financial advisor before making a decision:
- What is the property's current assessed value vs. market value, and what will the annual tax bill look like after reassessment?
- If moving in within the year isn't possible, is the new tax level manageable long-term?
- If it's a rental, do the income figures still work at the new tax level?
- What would a sale generate, and how does that compare to the annual cost of holding?
For a plain-English explanation of step-up basis and how it affects your capital gains when you sell, see our inherited home glossary.
If you've run the numbers and selling makes more sense than holding, the next step is simple. Wedgewood Homes buys inherited properties directly across our California markets — no repairs required, no commissions, no open houses. Use our net proceeds calculator to model what different sale scenarios actually net you, or learn more about selling as-is if the property needs work.
Get a no-obligation cash offer whenever you're ready, or schedule a call with a local market specialist to talk through your situation first. No pressure, no commitment.
Frequently Asked Questions
What if I inherit the home but live out of state?
If you can't establish the inherited property as your primary California residence within one year, the property will be reassessed to current market value. There is no exception for out-of-state heirs.
Is there any effort to change Prop 19?
There is an active "Repeal the Death Tax" initiative currently gathering signatures to qualify for the November 2026 ballot. As of mid-2026 it has not yet qualified, and the current rules remain in effect. It's worth checking the current status with your county assessor or estate attorney before making any decisions based on a potential change.
Can a grandparent transfer to a grandchild under Prop 19?
Yes, but only if the grandchild's parent — who is the biological or adopted child of the transferring grandparent — is deceased at the time of the transfer. This prevents the grandparent-grandchild path from being used to skip the parent-child restriction.
What form do I need to file?
The form you need is the Claim for Reassessment Exclusion for Transfer Between Parent and Child (Form BOE-19-P), available from your county assessor's office or at boe.ca.gov/prop19.
Wedgewood Homes buys inherited properties directly from heirs and estates across our markets — with no repairs required, no agent commissions, and no fees. We serve sellers throughout Southern California, the Inland Empire, Orange County, San Diego, the Bay Area, Sacramento, the Central Coast (Santa Barbara to San Luis Obispo), the Central Valley (Stockton to Bakersfield), Las Vegas, Reno, Dallas, Salt Lake City, Denver, and Colorado Springs. View all Wedgewood Homes locations or browse our homes for sale.