Thinking about downsizing in Los Altos or navigating an inherited home in the family? California’s Proposition 19 changed how property taxes work when you move or pass a home to the next generation, and the details can impact your budget in a big way. If you understand the new portability rules and the inheritance limits, you can plan with confidence and avoid costly surprises. This guide breaks down how Prop 19 applies in Los Altos, what to expect on property taxes, and the smart next steps to take. Let’s dive in.
What Prop 19 changed
Prop 19 made two big updates to California property taxes. First, it expanded tax base portability for eligible homeowners who sell and buy another primary residence. Second, it limited the reassessment exclusion for inherited properties. These rules apply to transfers and reassessments after February 16, 2021.
In a high-price market like Los Altos, both changes matter. Portability can help you keep a lower taxable base when you move. For heirs, the new limits often mean higher taxes unless they will live in the home and meet the value test.
Portability for 55+, disabled, and disaster victims
If you are age 55 or older, severely disabled, or your home was substantially damaged by a qualifying wildfire or disaster, you may transfer the taxable value of your primary residence to a replacement primary residence anywhere in California.
Who qualifies and how many times
- You qualify if you are 55+, severely disabled, or a qualified disaster victim.
- You can transfer your base-year value up to three times if you are 55+ or severely disabled. Disaster-related transfers may have special treatment.
- The replacement property must be your primary residence.
How the value transfer works
- If your replacement home’s market value is equal to or less than your original home’s value at the time of transfer, your taxable value generally moves with you.
- If the replacement home is more expensive, your transferred taxable value is adjusted upward by the price difference. The result is still a lower assessed value than a full reset to market, but not as low as a straight transfer.
Here is the concept in plain terms. Suppose your Los Altos home has a low taxable value under Prop 13 and a much higher market value. If you buy a lower priced home, you can usually keep that low base. If you buy higher, your new base increases by the difference between old and new market values.
Timing and filing in Santa Clara County
There is a statutory window around your sale and purchase. You must file a claim with the county assessor and provide proof of eligibility and transaction dates. In practice, you will coordinate with your escrow officer to ensure the right forms are submitted, then confirm with the Santa Clara County Assessor on deadlines and required documentation.
Keep records of your close dates, ID showing age or eligibility, and any disaster documentation if applicable.
A planning checklist for downsizers
- Confirm your current taxable value from your property tax bill.
- Verify eligibility based on age, disability, or disaster status.
- Price out replacement homes in your target area and model tax bills for lower versus higher purchase prices.
- Coordinate filing steps with escrow and the Santa Clara County Assessor.
- Review cash flow with a CPA or financial advisor so your annual taxes fit your retirement plan.
Why portability matters in Los Altos
Los Altos homeowners often have large gaps between market value and taxable value. Portability can preserve thousands of dollars per year in property taxes if you move to a similar or lower priced home. If you buy higher, it still softens the increase.
Inherited properties under Prop 19
Before Prop 19, many parent to child transfers avoided reassessment. Now, the rules are narrower. A family home can avoid reassessment only if the heir makes it their principal residence and the transfer meets a value limit. Most non-primary residences are reassessed.
Principal residence requirement
To qualify for the parent to child or grandparent to grandchild exclusion, the property must be a family home and the heir must occupy it as a principal residence. The heir needs to file a claim with the county assessor and provide evidence of occupancy such as driver’s license, voter registration, and utility bills. Follow county procedures and deadlines closely.
The 1,000,000 value cap explained
The exclusion is limited to the parent’s taxable value plus $1,000,000. The state indexes this amount for inflation over time.
- If market value at transfer is less than or equal to the parent’s taxable value plus $1,000,000, there is no reassessment.
- If market value is higher than that limit, the excess is reassessed. The new assessed value will be roughly market value minus $1,000,000.
Example: Parent’s taxable value is $200,000 and market value is $3,000,000. The exclusion limit is $1,200,000. Since market value is above the limit, the approximate new assessed value becomes $2,000,000. The heir’s property taxes will be based on this higher number.
What about rental or vacation homes
Under Prop 19, inherited properties that are not used by the heir as a principal residence are generally reassessed to market value. This is a major shift for families who planned to pass down investment or second homes without triggering higher property taxes.
Filing, proof, and timing
Heirs must file an exclusion claim with the county assessor and document principal residency within required time frames. Provide clear proofs of occupancy and keep records of deeds, trust or probate documents, and death certificates. Missing a deadline can result in immediate reassessment.
Why this matters in Los Altos
Many Los Altos homes have long-held Prop 13 bases. When heirs do not move in, or when market value far exceeds taxable value plus $1,000,000, a reassessment can be significant. Planning early helps families decide whether an heir will occupy the home, how to budget for new taxes, and whether other estate planning tools make sense.
Strategy for Los Altos households
If you are 55+ and thinking of moving
- Evaluate multiple price points for your next home and model the tax impact in each scenario.
- Consider timing your sale and purchase so the portability claim is straightforward.
- Coordinate with your CPA on cash flow and with your agent and escrow on filing steps.
If you plan to pass your home to family
- Discuss whether an heir will live in the property and when they could establish principal residency.
- Model the value cap to see if the transfer will trigger partial or full reassessment.
- Engage an estate planning attorney to evaluate trust structures and timing, since lifetime transfers can trigger reassessment.
If you are an heir or executor today
- Determine the parent’s taxable value and current market value.
- Decide quickly whether any heir will occupy the home and gather occupancy evidence.
- File the exclusion claim on time and coordinate with the Santa Clara County Assessor, your escrow or title officer, and your CPA.
Common pitfalls to avoid
- Assuming an inherited home will keep the parent’s tax base. Under Prop 19 this is limited and requires occupancy and a value test.
- Missing assessor deadlines or failing to file the exclusion claim.
- Confusing property tax rules with federal income tax basis. Prop 19 affects property tax assessment only.
- Not coordinating paperwork among your agent, escrow, CPA, and the county.
How Anita supports your plan
You deserve a clear path from decision to outcome. As a Silicon Valley advisor focused on tax-aware strategy, Anita organizes the steps around your goals, whether you are downsizing in Los Altos or managing an inherited home.
Here is how the process typically works:
- Discovery: Clarify your move or inheritance goals and outline the property tax variables under Prop 19.
- Scenario modeling: Compare sell and buy options, estimate tax bills under portability, and outline net proceeds.
- Coordination: Align timing with escrow and the Santa Clara County Assessor, and partner with your CPA and estate attorney.
- Execution: Market and negotiate your sale, structure timelines, and support filings to help avoid avoidable tax surprises.
When you are ready, let’s map your numbers, timing, and paperwork into a simple, step-by-step plan. Connect with Anita Salas to get started.
FAQs
What is Prop 19 and when did it take effect in California?
- Prop 19 updated property tax rules for portability and inheritance. It applies to transfers and reassessments after February 16, 2021.
How does Prop 19 portability help Los Altos homeowners age 55 and older?
- If you qualify, you can transfer your taxable value to a replacement primary residence anywhere in California, up to three times, which can lower your ongoing tax bill.
What happens if my replacement home costs more than my Los Altos home?
- Your transferred taxable value is adjusted upward by the price difference, so your new assessed value is higher than your old base but lower than a full market reassessment.
Can an heir keep a parent’s low tax base on a Los Altos home under Prop 19?
- Possibly, if the heir makes it a principal residence and the market value does not exceed the parent’s taxable value plus $1,000,000, with proper filing and proof of occupancy.
Do inherited rental or vacation homes in Los Altos avoid reassessment under Prop 19?
- Generally no. Non-primary residences are reassessed to market value when transferred to heirs under the new rules.
Does Prop 19 change the federal tax basis on inherited property?
- No. Prop 19 affects property tax assessment only. Federal income tax basis and capital gains rules are separate and should be reviewed with a CPA or tax attorney.
