When California voters passed Proposition 19 in November 2020, it quietly reshaped one of the most important estate planning tools available to families: the parent-child property tax exclusion. If you own real estate in California and plan to pass it on to your children — or if you have already inherited property from a parent — understanding Prop 19 is no longer optional.
Before Prop 19 took effect on February 16, 2021, California's Proposition 58 allowed children to inherit a parent's primary residence and up to $1 million in other real property without triggering a property tax reassessment. That meant a child could inherit a home their parent bought decades ago and continue paying taxes based on the original, much lower assessed value.
Prop 19 significantly narrowed that benefit. Today, the parent-child exclusion for a primary residence only applies if the child moves into the home as their own primary residence within one year of the transfer. Even then, if the home's fair market value exceeds the parent's assessed value by more than $1 million, the excess is added to the assessed value — meaning the child's tax bill will be higher than the parent's was.
For investment properties, vacation homes, and rental properties, the exclusion is gone entirely. A child who inherits a rental property their parent owned for 30 years will now face a full reassessment at current market value — which in many parts of California can mean a dramatic increase in annual property taxes.
There are, however, planning strategies that can help. Transferring property into a trust before death, timing transfers carefully, and coordinating real property decisions with your broader estate plan can all make a meaningful difference. The key is acting before a transfer occurs — not after.
If you own real property in California and have not reviewed your estate plan since February 2021, now is the time. The rules have changed, and a plan built under the old law may no longer accomplish what you intended. Attorney Nelson works with families throughout the Central Valley to navigate exactly these kinds of changes — helping you protect your assets and your heirs from unnecessary tax burdens.