California Proposition 19: Property Tax Transfers

California Proposition 19 — the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act — made significant changes to how property tax bases can be transferred. These rules directly affect title, escrow, and closing on properties across the South Bay.

Base Year Value Transfer for Eligible Homeowners (effective April 1, 2021): Homeowners who are 55 years of age or older, severely disabled, or whose property was extensively destroyed by wildfire or natural disaster may transfer the taxable value of their primary residence to a replacement primary residence. The replacement can be anywhere in California, of any value (with upward adjustments if the replacement is of greater value), purchased or newly constructed within two years of sale, and used up to three times (unlimited for wildfire-destroyed properties).

Taxation of Inherited Property Transfers (effective February 2021): Prop 19 narrowed the rules allowing parent-to-child and grandparent-to-grandchild transfers without a property tax increase. The taxable value can only be transferred if the property will be used as a primary residence (or farm) by the child or grandchild, the homeowner's exemption is filed within one year of transfer, and specific value thresholds are met.

If the property value at the time of transfer exceeds the parent's assessed value by less than $1 million, the child takes the parent's assessed value. If the difference is $1 million or more, the child's assessed value is the current market value minus $1 million. This is a significant change from prior law, which allowed unlimited transfers of primary residences and up to $1 million in other real property without reassessment.

Agents should consult their clients' tax advisors or local assessor's office for eligibility determinations. Required forms are obtained from and filed with the county assessor. Team Goeglein at Fidelity National Title ensures all Prop 19 implications are communicated during the closing process on every South Bay transaction.