If you’re a California resident expecting to inherit a home from your parents or other family members, understanding how Proposition 19 affects your inheritance is critical to making informed decisions about your family’s future. This law, which took effect in 2021, fundamentally changed the property tax landscape for inherited homes—and could cost you tens of thousands of dollars if you’re not prepared.
Who This Guide Is For
This article is essential reading if you’re:
What Is Proposition 19 and How Does It Affect Property Inheritance?
Proposition 19, officially known as the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, passed narrowly in 2020. While it was marketed as a way to help older Californians downsize, it dramatically changed how property taxes work when you inherit a home.
Before Proposition 19: Parents could transfer their home and their low property tax rate to their children, regardless of how the children used the property.
After Proposition 19: The property’s value gets reassessed at the time of transfer, potentially causing property taxes to skyrocket.
This change has made it significantly harder for many California families to keep inherited homes, forcing difficult decisions during an already emotional time.
## Can I Keep My Parents’ Low Property Tax Rate?
The short answer: only under specific conditions.
If you plan to make the inherited home your primary residence:
Important limitation for multi-unit properties: If your parents lived in a duplex, triplex, or multi-unit building, only the specific unit they occupied qualifies for the reassessment exemption. Other units will be reassessed at current market value, even if you or other family members already live there.
Estate planning attorney Alicia Gamez, who specializes in California taxation law, notes: “I have seen circumstances where the property tax reassessment really threatens a family’s ability to stay in their neighborhood”.
## What Happens If I Rent Out the Inherited Property?
Before Proposition 19, many heirs chose to rent out inherited homes while maintaining the low property tax rate their parents had locked in decades ago. This strategy no longer works.
Under current law:
One notable example: Before Proposition 19, actor Jeff Bridges and his siblings paid just $5,700 in annual property taxes on a Malibu beach house inherited from their parents—while renting it for $15,995 per month. This type of arrangement is no longer possible.
The law was specifically designed to eliminate these “market anomalies” where people held vacant or rental properties with extraordinarily low carrying costs.
## Real-World Scenarios: What Should You Do?
Scenario 1: You want to live in the inherited home
Scenario 2: You already own a home and don’t want to move
Scenario 3: Multiple siblings inherit together
## Why Was This Law Passed?
Proposition 19 had two stated goals:
1. Help seniors downsize: People 55 and older can now transfer their low tax rate to a new home of equal or lesser value, making it easier to move to smaller, more manageable properties.
2. Generate revenue for fire suppression: 80% of increased property tax revenue funds local fire districts, with the remaining 20% going to the California Department of Forestry and Fire Protection.
The California Association of Realtors lobbied heavily for the proposition, claiming it would “open up tens of thousands of housing opportunities” for first-time homeowners and families.
## Could Proposition 19 Be Repealed?
Some property owners are organizing to repeal Proposition 19 and bring the issue back to voters, but the movement remains small.
Estate law attorney Kern Singh advises clients to wait before making drastic decisions: “I’m a real estate investor myself, and I haven’t taken any drastic measures. I’m waiting to see how this pans out in the long run”.
However, Gamez is skeptical about repeal prospects. She points out that newer homeowners paying high property taxes may resent neighbors with decades-old low tax bases: “Are those neighbors going to vote to let their neighbor keep their 1979 property tax basis? I think there are a lot of people who feel significant resentment towards having not been born here in the first place”.
## How California Probate and Trust Can Help
Navigating property inheritance under Proposition 19 requires careful planning and expert guidance. At California Probate and Trust, PC, we help California families:
Our experienced estate planning attorneys provide transparent, compassionate guidance tailored to your unique family situation. We’ve helped thousands of California residents protect their legacies and make informed decisions about property inheritance.
Schedule your free consultation today to discuss how Proposition 19 affects your family’s estate plan. Call (866) 674-1130 or visit cpt.law to get started.
## Key Takeaways
Source: KQED – Inheriting a Home in California? Here’s What You Need to Know
Legal Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Estate planning and property tax laws are complex and subject to change. Individual circumstances vary significantly, and the information presented here may not apply to your specific situation. For personalized legal guidance regarding property inheritance, Proposition 19, or estate planning matters, please consult with a qualified California estate planning attorney. California Probate and Trust, PC offers free consultations to discuss your unique needs and circumstances.