Prop 19 - Property Taxes on Inherited Properties

Proposition 19 was passed and states that children who inherit their parents’ properties will no longer receive property tax breaks if they intend to keep as a second home or investment.

Originally under Proposition 13, transfers of principle residence of a parent, and up to $1 million of assessed valuation of any other properties received property tax breaks which resulted in properties being transferred without a reassessment of value.

Now under the new proposition, the exemption from property tax reassessment for property inherited from a parent (or grandparent if parents are deceased) will only apply if the child occupies the real property and files a homeowner’s exemption application within one year. If not, the property will be reassessed and the new inherited owner will pay annual property taxes on the new value.

Property taxes are different in each county but it is on average 1.2% of assessed value in California. This assessed value is not fixed and increases by 2% or the rate of inflation each year, whichever is lower.