If you’re a homeowner in California over the age of 55 — or someone planning to pass down property to your children — Proposition 19 could significantly impact your future. Whether you're thinking about moving or navigating estate planning, understanding how this law works is crucial.

Let’s break down what Prop 19 changed, how it benefits certain homeowners, and why it might affect your family’s plans.

The Basics of Proposition 19

Proposition 19, passed by California voters in November 2020, made two major changes to the state’s property tax rules.

First, it allows seniors, disabled individuals, and wildfire or natural disaster victims to transfer their existing property tax base to a new home — even across county lines, and even if the new home is more expensive.

Second, it changed how inherited homes are taxed. In most cases now, heirs must move into the home and make it their primary residence if they want to retain the original (and often much lower) property tax base.

These two changes represent a trade-off: more flexibility for homeowners looking to move, but stricter rules for those passing down property.

Moving Without Losing Your Low Tax Base

For many seniors, a big concern with moving is the spike in property taxes that can come with it. Thanks to Prop 13, long-time homeowners often pay significantly less than newer buyers — but before Prop 19, moving typically meant losing that advantage. Before Prop 19, eligible homeowners could transfer their property tax base only once in their lifetime and only to specific counties.

Prop 19 changes that. Now, if you're 55 or older, you can sell your home and transfer your low property tax base to a new one anywhere in California. You can do this up to three times in your lifetime. And if your new home costs more than your old one, you'll only pay higher taxes on the difference in value.

Below are a few hypothetical situations for downsizing and upsizing that illustrate the benefits of Prop 19 in practice.

A Downsizing Example

Take Carol, a 68-year-old homeowner in San Jose. She bought her house back in 1985 for $150,000 and pays about $2,000 a year in property taxes. Her home is now worth $950,000, but she’s ready to downsize and move to a $700,000 home in Sacramento to be near family.

Without Prop 19, Carol’s property taxes would reset to about $7,000 annually — a significant jump. But under the new rules, she keeps her old tax base and continues paying around $2,000 a year, even in a different county. That’s a savings of about $5,000 annually — or $50,000 over 10 years.

An Upsizing Example

Now consider James, a 72-year-old retiree in Modesto. He wants to move to Santa Barbara to be closer to his grandchildren. His current home, purchased for $200,000 and for which he now pays around $3,000 a year in taxes, is now worth $700,000. He’s eyeing a $1.1 million home in Santa Barbara.

Thanks to Prop 19, James can transfer his existing tax base and only pay increased property taxes on the $400,000 difference between the two homes. That means instead of paying over $11,000 annually in property taxes on the new home of $1.1 million, his new bill will be closer to $7,500 (roughly speaking, the $3,000 a year on his old home sold for $700,000 and $4,000 per year on the difference between the new home and old home sales prices) — about $3,500 in yearly savings.

What Changed for Inherited Property

Before Prop 19, if you passed your home to your children or grandchildren, they could keep your low property tax rate — even if they didn’t live there. Many families used this as a way to pass on valuable real estate with minimal tax burden.

That’s no longer the case.

Now, to retain the low property tax rate, heirs must move into the inherited property and make it their primary residence. If they don’t, the property will be reassessed at market value — which often means a much higher annual tax bill.

There are a few additional rules here:

• The new homeowner must file a claim to transfer the tax base within a year of the inheritance.
• There’s a $1 million cap on the value that can be excluded from reassessment.
• Any value above that threshold is reassessed at market rates.

This change has major implications for estate planning, especially for families hoping to pass down homes that children may want to rent out or sell instead of live in.

The Takeaway

Proposition 19 offers valuable opportunities for older Californians who want to relocate without triggering higher property taxes. It can make downsizing, upsizing, or simply moving closer to loved ones much more financially feasible.

But it also tightens the rules around inherited property, potentially increasing costs for families who aren’t planning to live in the home they receive.

If you’re 55 or older and thinking about moving to another home in California, Prop 19 may help you make that move more affordably. And if you’re thinking about passing your home on to your children, it’s a good idea to talk with a tax or estate planning professional to understand how these new rules affect your options.