Understanding Proposition 19

Proposition 19 is a California state law that changed how property taxes are determined for homeowners. Voted in in November of 2020 and taking effect in 2021, it directly impacts how new homeowners, specifically older adults and those inheriting property, calculate property taxes. At LBC Mortgage, we help homebuyers understand how the law might impact their long-term financial objectives.

Key Changes Introduced by Proposition 19

Transfer of Tax Base for Seniors and Disabled Homeowners

One major benefit of Proposition 19 is the ability for homeowners aged 55 or older, severely disabled, or victims of natural disasters to transfer their existing property tax base to a new home. Previously, this was allowed only in certain counties and only once. Now, eligible homeowners can move anywhere in California and transfer their low property tax base up to three times.

This is a significant advantage for older homeowners looking to downsize or relocate. It allows them to keep their lower property tax bill, even if they move into a more expensive home. At LBC Mortgage, we often guide older clients through this process, helping them unlock the benefits of Prop 19 when purchasing their next home.

Inherited Properties Now Reassessed

Before Prop 19, children who inherited property from parents or grandparents could also inherit the original property tax rate, even if they didn’t live in the home. This created a loophole where some individuals paid very little property tax on valuable inherited homes.

Now, inherited homes are reassessed to current market value unless the child or grandchild uses the home as a primary residence. This change increases property tax for many inherited properties, especially those used as rentals or vacation homes. Homebuyers considering inherited property should understand this impact before finalizing the transfer.

How Prop 19 Affects New Homebuyers

Increased Competition from Downsizing Seniors

With older homeowners now able to transfer their tax base anywhere in California, more seniors are entering the real estate market. This increases competition, especially in popular areas with mild weather and strong communities. At LBC Mortgage, we work with both first-time buyers and retirees to help navigate this competitive landscape.

Seniors who previously felt “locked in” by low property taxes are now free to explore new homes. That can lead to bidding wars in certain markets. Understanding these dynamics helps our clients make better offers and close faster.

Property Tax Estimates for New Buyers

For most new buyers, Prop 19 doesn’t offer tax savings. Instead, they pay property tax based on the current market value of the home. This underscores the importance of accurate estimates during the mortgage process. At LBC Mortgage, we include detailed property tax projections when calculating monthly mortgage payments. That way, our clients aren’t surprised by their first tax bill.

We also help buyers determine if their property might qualify for any exemptions or reassessment delays, particularly when buying from family members.

Planning Ahead with Proposition 19 in Mind

Strategic Family Transfers

Homebuyers receiving property from parents or grandparents must be strategic. If the plan is to use the home as a rental or second residence, property taxes will likely rise. However, if a child plans to live in the home as a primary residence, the original tax base may be preserved—up to $1 million of assessed value.

This makes timing and use critical. At LBC Mortgage, we collaborate with estate planners and tax professionals to help families transfer property in the most cost-effective way possible.

Upsizing and Downsizing Options

Prop 19 creates new opportunities for both upsizing and downsizing. Seniors no longer need to stay in homes that no longer meet their needs. At the same time, younger families may find new inventory from those downsizing. Knowing how the tax implications change during a move allows us to offer tailored mortgage solutions.

Whether you’re buying your first home or helping a parent relocate, we ensure every financial factor is considered—especially property taxes.

Why Choose LBC Mortgage When Navigating Prop 19

We understand California’s complex tax laws and how they affect your mortgage. Proposition 19 introduced a new layer of strategy when buying, selling, or transferring property. Our team has deep experience helping clients structure transactions to take full advantage of the law’s benefits.

We offer:

  • Expert guidance on property tax implications
  • Coordination with estate and tax professionals
  • Tailored mortgage solutions for seniors, families, and first-time buyers
  • Transparent estimates for total monthly housing costs

Most importantly, we offer personal attention. You won’t get generic advice. You’ll get a dedicated loan specialist who understands Prop 19 and how to use it to your advantage.

Final Thoughts

Proposition 19 changes the landscape for California homebuyers. It opens new opportunities for older adults and brings reassessment challenges for inherited homes. Understanding these rules can help you plan smarter, avoid tax surprises, and make confident real estate decisions.

At LBC Mortgage, we help you make sense of it all. Whether you’re buying your next home or helping your family transfer property, we’re here to guide you every step of the way.