California Proposition 19 and Inherited Homes: How Property Taxes Are Reassessed

Overview

California Proposition 19 fundamentally changed how inherited homes are taxed when they pass from a parent to a child. While many families believe the parent’s low property tax assessment automatically carries over, that is no longer the case under current law. Instead, a limited protection applies only when strict requirements are met, and even then partial reassessment is common.

This article explains how the assessed value plus $1,000,000 adjusted exclusion works when a child inherits and lives in a parent’s principal residence. Understanding this calculation is essential for estate planning, trust administration, and post death property tax planning.

What Proposition 19 Changed

Proposition 19 was approved by California voters in November 2020 and applies to property transfers occurring on or after February 16, 2021. Among other provisions, it significantly narrowed the parent to child property tax exclusion for inherited real estate.

Under prior law, children could often retain a parent’s assessed value on inherited property regardless of use. Proposition 19 eliminated that broad exclusion and replaced it with a more limited rule that applies only to a principal residence occupied by the child.

Key Requirements to Qualify

To qualify for any property tax protection under Proposition 19, all of the following conditions must be met:

• The property must be inherited from a parent
• The property must have been the parent’s principal residence
• The child must occupy the property as their own principal residence
• A timely Proposition 19 claim and homeowners exemption must be filed with the county assessor

Failure to satisfy any one of these requirements results in full reassessment to fair market value.

The Assessed Value Plus $1,000,000 Adjusted Cap

When the requirements are met, Proposition 19 allows the child to retain the parent’s assessed value plus an additional exclusion amount. This exclusion was originally set at $1,000,000 and is adjusted periodically for inflation by the California State Board of Equalization.

For transfers occurring between February 16, 2025 and February 15, 2027, the adjusted exclusion amount is $1,044,586.

How Partial Reassessment Is Calculated

The calculation follows a defined sequence:

1. Identify the parent’s assessed value immediately before death
2. Add the applicable adjusted exclusion amount
3. Compare the total protected cap to the property’s fair market value at death

If the fair market value is less than or equal to the protected cap, no reassessment occurs and the child retains the parent’s assessed value. If the fair market value exceeds the protected cap, only the excess is reassessed.

Example

Assume the following facts:

• Parent assessed value: $200,000
• Fair market value at death: $1,600,000
• Adjusted exclusion amount: $1,044,586

The protected cap equals $1,244,586. The excess value of $355,414 is reassessed. The new assessed value becomes $555,414, not the full market value but substantially higher than the original assessment.

Schedule a Consultation to evaluate how Proposition 19 applies to your family or trust.

Practical Planning Considerations

• County assessors apply Proposition 19 rules strictly
• Residency documentation is critical and frequently reviewed
• The exclusion amount changes over time and must be verified
• Older trusts drafted before Proposition 19 often require revision

See current federal rates on the Economic Dashboard.

Final Takeaway

Proposition 19 does not eliminate property tax reassessment on inherited homes. It provides limited protection that preserves the parent’s assessed value and adds an inflation adjusted exclusion. Any value above that threshold is reassessed. Understanding this distinction is essential before relying on outdated assumptions about inherited property taxes in California.