Prop 19 changed what inheriting a house means.

The old rule, briefly

California property taxes are based on a property’s assessed value at purchase, growing at most 2% a year (Prop 13). For decades, parents could pass a house — any house — to children with that low assessed value intact. A house bought in 1978 could carry a 1978-based tax bill into a third generation.

What Prop 19 did

For deaths and transfers on or after February 16, 2021, the parent-child exclusion survives only when the child moves into the house as their principal residence, generally claiming it within a year, and even then, only the first $1 million or so of the gap between the old assessed value and market value stays excluded (the cap adjusts over time). A rental, a second home, or an inherited house the heirs don’t live in gets reassessed to market value as of the transfer.

What that looks like in practice

Say the family house has an assessed value of $95,000 and a market value of $850,000. Under the old rules, heirs kept a tax bill near $1,200 a year. Under Prop 19, if nobody moves in, the bill resets to roughly 1–1.25% of $850,000 (call it $9,000–$10,000 a year) from the date of death. Heirs planning to keep the house as a rental discover the yield they imagined included a tax bill that no longer exists.

The decisions it forces

Move in: one heir occupying as a principal residence can preserve much of the exclusion. Workable for one heir, complicated for four. Keep as a rental: run the numbers with the new tax bill, not the old one. Sell: often the cleanest split, and note that heirs also generally receive a stepped-up income-tax basis to date-of-death value, so a prompt sale frequently owes little or no capital-gains tax. The property-tax reset and the income-tax step-up point in opposite directions, which is exactly why estates should run both sets of numbers before deciding.

Deadlines matter

Reassessment runs from the date of death, not the date anyone gets around to paperwork, and supplemental bills arrive retroactively. File the claim forms with the county assessor promptly if an heir is moving in; talk to a CPA or estate attorney before choosing a path.

Sources: California Board of Equalization Prop 19 guidance at boe.ca.gov/prop19; Revenue & Taxation Code §63.2. Checked August 2026. This is general information, not tax or legal advice: the numbers above are illustrative, and a CPA should run yours.