Inheriting a parent's home in California: will the property taxes go up?
For decades, California children could inherit a parent's home and keep the parent's low property tax assessment, whether they lived there or rented it out. Proposition 19 changed that for transfers on or after February 16, 2021. In Orange County, where a parent may have bought decades ago, the difference can be thousands of dollars a year.
The rule now
A child who inherits a parent's family home can keep the parent's assessed value only if:
- The home was the parent's principal residence.
- The child makes it their own principal residence within one year of the transfer.
- The child files for the homeowners' exemption (or disabled veterans' exemption) within that year, and claims the parent to child exclusion with the county assessor.
Rental properties and second homes no longer qualify. They are reassessed to market value when they pass to the children.
The value cap
Even when the child moves in, the exclusion is limited. The child keeps the parent's taxable value plus an inflation adjusted amount set by the Board of Equalization. For transfers from February 16, 2025 through February 15, 2027, that amount is $1,044,586. If the home's market value is higher than the parent's taxable value plus $1,044,586, the difference is added to the assessment.
What if several children inherit?
Only the share passing to a child who moves in can qualify. When one sibling moves in and the others do not, the family often needs a plan, such as a buyout funded by a loan, and the timing matters because of the one year rule.
Do not miss the filing
The claim must be filed with the Orange County Assessor. Filing deadlines and late filing rules can affect how many years of savings you receive, so file as soon as the transfer is clear, whether it happens through probate, a trust, or the $750,000 primary residence petition.
If you are deciding whether to keep, rent or sell an inherited home, look at the property tax result before anything is recorded.