Moving after 55, without losing your Prop 13 tax base
If you've owned your home in Laguna Niguel for decades, your property tax bill is probably far below your neighbors'. Many long-time owners stay put because they assume moving means losing that. Since 2021, for many owners, it doesn't.
First, why your tax bill is so low
In June 1978, California voters passed Proposition 13. Home values were climbing fast, and people who had paid off their homes were being taxed out of them. Prop 13 capped the tax rate at 1% of assessed value, plus voter-approved bonds, and limited how much the assessed value can rise to 2% a year.
A home is only reassessed to market value when it changes ownership or has new construction. That's why two identical houses on the same street can have very different tax bills. The family that bought in 1995 pays tax on a value that has grown slowly ever since.
What Proposition 19 changed
In November 2020, voters passed Proposition 19. For homeowners who are 55 or older, severely disabled, or whose home was damaged by wildfire or a natural disaster, it lets you sell your primary residence and transfer your existing taxable value to a replacement primary residence.
- Anywhere in California. Before Prop 19, this mostly worked only within the same county, or in a few counties that opted in.
- Up to three times for owners 55 and older, and for severely disabled owners.
- Timing: the replacement home generally has to be bought or built within two years of selling the original.
- A more expensive replacement is allowed. If the new home is worth more than the one you sold, the difference is added to your transferred value. You still keep most of the benefit.
Example: You bought in Laguna Niguel in 1995. Your home might sell for over $1.4 million while its taxable value is a fraction of that. If you buy a smaller home in San Clemente for less than you sold for, you can generally bring your old taxable value with you, instead of starting over at the new purchase price.
You have to file a claim with the county assessor where the new home is. The county won't apply the benefit automatically.
The part of Prop 19 that went the other way
Prop 19 also narrowed a benefit that families used to rely on. Before 2021, parents could pass almost any property to their children without reassessment. Now, for transfers since February 16, 2021:
- The exclusion mostly applies to a family home that the child makes their own primary residence, generally within one year.
- It's capped. The home keeps the parents' taxable value only up to the current taxable value plus an adjusted amount, which is $1,044,586 for transfers between February 16, 2025 and February 15, 2027, according to the State Board of Equalization. Value above that is added.
- Rentals and second homes passed to children are generally reassessed.
If you're planning for heirs, this is worth a conversation with an estate planning attorney before you decide whether to keep or sell.
Questions to ask before you list
- Do I qualify? Am I 55 or older on the date I sell the original home?
- What's my current taxable value? It's on your property tax bill.
- What's my likely sale price, and how does the replacement price compare?
- Have I used this benefit before? If so, how many times?
We're happy to walk through the numbers with you. Send us a question.
This guide is general information, not tax or legal advice. Prop 19 has detailed rules and deadlines. Confirm your situation with the Orange County Assessor or a qualified tax professional. Sources: the California State Board of Equalization's Proposition 19 materials and county assessor guidance.