How to Avoid Property Tax Reassessment Under California Prop 19: A Guide

California’s Prop 19 has changed the rules around passing a home from one generation to the next. For decades, children could inherit a home and keep their parents’ low property taxes, even if they didn’t live in the home. Prop 19 changed all of that, leaving many wondering how to avoid property tax reassessment under California Prop 19.

Under Prop 19, the county will often reassess the home — meaning they redo the property tax calculation based on what the home is worth today, not the older, lower value your family was paying taxes on. That can lead to a surprising jump in yearly taxes.

The good news is that families can still keep the lower tax base in many situations — as long as they meet the Prop 19 requirements and file the right forms on time. This guide walks you through those rules step-by-step, in simple, clear language, so inheriting the family home stays realistic and affordable.

CA Prop 19 Explained​

Under Prop 19, most inherited properties are reassessed to the current market value unless the transfer meets very specific criteria. To preserve the existing property tax base, the property must have been the parents’ primary residence, the child must make that property their own primary residence, and both the Homeowner’s Exemption and the Parent-Child Exclusion Claim must be filed within one year. Similar rules apply to transfers from grandparents to grandchildren, with the additional requirement that a grandchild’s parents are deceased.

Primary residence considerations include (1) where you are registered to vote, (2) the home address on your automobile registration, and (3) where you normally return after work. You may also consider the place at which you have spent the major portion of your time this year.

These rules do come with limitations. When the child or grandchild moves into the property and files the appropriate forms on time, up to $1 million of the difference between the assessed value and market value can be excluded from reassessment. If the market value exceeds the limit, the excess is partially reassessed.

If the difference exceeds that $1 million cap, the assessor performs a partial reassessment using a required formula. For example:

• Parents’ assessed value: $400,000
  
• Market value at transfer: $1,800,000
  
• Excludable amount under Prop 19: $1,000,000
  
• Excess amount subject to reassessment: $400,000

Any property not used as a primary residence — including rentals, vacation homes, or homes held in an LLC — is fully reassessed with no exclusion available. Because Prop 19 is administered by county assessors, documentation and proof-of-residency requirements can differ from county to county. These Prop 19 rules help heirs avoid reassessment after a parent passes, but they’re not the only options available. Families can also prevent reassessment before death through lifetime gifting.

How to Avoid Property Tax Reassessment California Prop 19 and Multiple Heirs

With more than one heir, avoiding Prop 19 reassessment takes extra care. Only one sibling needs to move into the home to keep the lower tax base — but any siblings who remain on the title can still cause a partial reassessment because their ownership doesn’t qualify as a primary residence. 

If one child wants to keep the house, a buyout (paying the others for their share) is usually the next step. If it’s not done incorrectly, however, a buyout can create tax problems or trigger reassessment anyway. 

And buyouts aren’t the only area where families run into unexpected hiccups. Many well-intentioned strategies create unexpected tax consequences because of misunderstandings about how Prop 19 really works.

Myths About Prop 19 Loopholes

Many families look for creative ways to keep a low property tax bill after a parent passes away. Unfortunately, a lot of the “workarounds” shared online simply don’t work under Prop 19. Here are the most common myths and realities behind them.

Myth 1: “Putting the house in an irrevocable trust will avoid reassessment.”

Reality: An irrevocable trust doesn’t prevent reassessment under Prop 19. What matters is who lives in the home after the transfer, not the type of trust it’s held in. Even if the property sits in a trust, it will be reassessed unless the child beneficiary moves in and files the required exclusion forms on time.

Myth 2: “Transferring the property into an LLC avoids reassessment.”

Reality: Not necessarily. Under Prop 19, assessors focus on who owns and uses the property, not whether it sits inside an LLC. If the LLC structure looks like a tax-avoidance strategy, the assessor can ignore it and reassess the home. Changes in LLC membership often trigger reassessment too. While LLCs can be great for rental or investment properties, they don’t preserve a low tax base for inherited family homes.

Myth 3:  “A charitable trust is a workaround for Prop 19.”

Reality: Charitable trusts are valuable for tax planning, but they don’t change the rules for property tax reassessment. Prop 19 requires a child to live in the home and file the proper forms — charitable structures don’t alter that requirement and offer no protection for keeping the low assessed value.

A reliable way to avoid Prop 19 reassessment on a family home is for the child (or grandchild, if the parents are deceased) to move into the property, make it their primary residence, and file both the Homeowner’s Exemption and the Parent-Child (or Grandparent-Grandchild) Exclusion Claim within one year. Every other strategy — trusts, LLCs, or creative planning structures — may have valid purposes, but none of them is guaranteed to preserve a low property tax base unless the new owner actually lives in the home and files on time. When that isn’t possible, many families explore another option that still keeps property taxes manageable: transferring the home during the parents’ lifetime.

Lifetime Gifting

Many people think gifts over $19,000 trigger a tax, but that’s a misconception. Gifts above that amount simply require IRS Form 709 and count toward your lifetime federal gift exemption (currently $13,990,000 for 2025 and will increase to $15,000,000 in 2026). That means you could possibly gift a $300,000 or $900,000 home today without paying a federal gift tax — as long as you file the form. *Thresholds may change yearly, and readers should confirm current figures.

Strategic and careful transfers, such as through an LLC or careful planning with an attorney, may help avoid the effects of Prop 19. If reassessment and property taxes are not a huge issue, lifetime gifting may be a beneficial path. Consulting with a tax attorney could help you make wise, money-saving decisions before it’s too late.

FAQ: Straight Answers About Avoiding Prop 19 Reassessment

Final Takeaways and Update

Recently, California’s Secretary of State announced that a new ballot initiative is collecting signatures on November 6, 2025 that could reinstate property tax exemptions eliminated by Prop 19.

As a California estate planning attorney, I’ve seen how overwhelming Prop 19 can feel for families — especially when they’re already dealing with loss, grief, or major life transitions. The good news is that reassessment can be avoided with the right plan, the right filings, and a clear understanding of what the law requires. 

At Gammon & Grange, we take pride in offering compassionate, personalized guidance, explaining the applicability of important laws in manageable ways that allow you to make informed decisions. We’d be honored to walk with you through the next steps.

This blog provides general information about inheritance tax and related topics in California and is for informational purposes only. It is not legal advice, does not create an attorney-client relationship, and should not be relied upon to make decisions about your specific situation. Readers should consult an attorney or other appropriate professional for advice tailored to their particular facts and circumstances.

Tax laws and thresholds change, and application of the law depends on individual facts; for guidance on your situation, please confirm current figures and seek personalized legal counsel from a licensed professional in your jurisdiction.