The short answer: Since February 16, 2021, a child who inherits a parent's California home keeps the parent's low property tax base only if the child moves in as their primary residence within a year, and only up to the parent's taxed value plus $1,044,586 (for transfers through February 15, 2027). Rentals and second homes no longer qualify. When one sibling keeps the house and buys out the others, the mortgage plan matters as much as the tax plan.

What did Prop 19 change?

Before 2021, parents could pass almost any California property to their children at the parents' tax base. Prop 19 narrowed that to the family home or family farm, and only when the child uses the home as their principal residence (California BOE, Pub. 800-1). Rental properties, vacation homes and commercial buildings are now reassessed to market value on transfer.

The exclusion is capped at the home's factored base year value plus an inflation-adjusted amount. The State Board of Equalization raised that amount to $1,044,586 for transfers from February 16, 2025 through February 15, 2027 (BOE news release). Grandparent-to-grandchild transfers can qualify when the grandchild's parent has passed away.

What does it look like in dollars?

An example from the San Gabriel Valley, using a 1.25% effective tax rate (typical for Los Angeles County with local assessments):

Assessed value Approximate annual tax
Parents' current taxed value $300,000 $3,750
Child moves in, Prop 19 applies ($1.8M market value − $1,044,586) $755,414 $9,443
Child doesn't move in (full reassessment) $1,800,000 $22,500

Annual property tax on a $1.8 million inherited home

$3,750Parents today$9,443Child moves in (Prop 19)$22,500No one moves in
Example: parents' taxed value $300,000; 1.25% effective tax rate. Source: Emory Financial calculation; exclusion amount ($1,044,586) from the California State Board of Equalization.

Moving in saves roughly $13,000 a year in this example, even though the tax still rises. Your county assessor makes the actual determination.

What are the deadlines?

  • The child must make the home their principal residence within one year of the transfer.
  • The child must file for the homeowners' exemption within one year, plus the BOE-19-P claim form (BOE-19-G for grandchildren).
  • If the child later moves out, the exclusion ends and the home is reassessed.

How do sibling buyouts work?

This is the conversation I have most often. Three siblings inherit a $1.8 million home; one wants to live there. To buy out the other two, that sibling usually needs a loan:

  • Inherited-property buyout financed as a rate-and-term refinance. Many lenders treat an estate or trust buyout as a purchase-like transaction rather than a cash-out, which can mean better pricing. Ask specifically.
  • Loan amount. Buying out two-thirds of $1.8 million is about $1.2 million, which sits just under the 2026 Los Angeles County conforming limit of $1,249,125 (FHFA via Calculated Risk). Above that, it's a jumbo loan.
  • Timing. Line up financing before the trust or probate distributes the property, so the transfer, the move-in and the refinance happen in the right order.
  • Qualifying. The sibling who stays must qualify on their own income for the new payment plus the higher property tax.

What should parents do now?

  1. Review your trust with an estate attorney. Distribution language matters under Prop 19; a trust doesn't preserve the exclusion automatically.
  2. Talk with your children about who, if anyone, wants to live in the home.
  3. Know your home's current taxed value. It's on your property tax bill.
  4. If no one will move in, compare keeping the home as a fully reassessed rental against selling. The math has changed.
  5. If you're 55 or older and want to move, Prop 19 may also let you carry your own tax base to a new home anywhere in California. That's a separate rule worth its own conversation.

Derek\'s take

In the San Gabriel Valley, the family home is often the family's largest asset and the center of multigenerational life. Prop 19 didn't end the ability to pass it down; it added deadlines and conditions. I work alongside estate attorneys and CPAs to make sure the financing fits the plan, and I'm glad to join a family meeting.

Frequently asked questions

Can I inherit my parents' rental property at their tax base?

Not since February 16, 2021. Prop 19 limits the exclusion to the family home and family farm.

Do I have to move in immediately?

Within one year of the transfer, and you must file for the homeowners' exemption in that time.

Does Prop 19 apply to transfers from child to parent?

Yes, the exclusion works in either direction.

Can I get a mortgage to buy out my siblings?

Yes. It's common, and many lenders offer favorable treatment for estate buyouts.

This article is general information, not tax or legal advice. Consult a California estate attorney and your county assessor for your situation.

Sources

This article is general education, not a commitment to lend, an offer of credit, or tax, legal or investment advice. All loans are subject to credit approval, income and asset verification, and property appraisal. Programs, rates, terms and limits change without notice; figures are current as of the publish date. Derek Shao, NMLS #242117, CA DRE #01358261. Financial Dynamics, Inc. DBA Emory Financial, Company NMLS #393986. Equal Housing Opportunity.