Many California homeowners over 55 are living in more house than they need, and staying put for one reason: property taxes. Thanks to Proposition 13, a home bought decades ago is taxed on a value far below what it is worth today. Sell it and buy another, and the new home is taxed at its full purchase price.
Proposition 19 changed that. Since April 1, 2021, homeowners who are 55 or older can sell their home and take its taxable value with them to a new home anywhere in California. For someone moving from Los Angeles or Ventura County to the Coachella Valley, or simply into a smaller home across town, it can cut the property tax bill on the new home by thousands of dollars a year.
Bill Lewis at Choice One Mortgage has spent more than 30 years helping California homeowners plan moves like this. In this guide, we'll cover who qualifies, how the new tax bill is calculated, the deadlines that matter, and how to finance the move.
Quick answer: If you are 55 or older and sell your primary residence, Prop 19 lets you transfer its taxable value to a replacement primary residence anywhere in California, as long as you buy or build within two years. If the new home costs more than the old one sold for, only the difference is added to your taxable value. You can do this up to three times, and you claim it by filing form BOE-19-B with the county assessor.
Why Property Taxes Keep Homeowners From Moving
Under Prop 13, a home's taxable value starts at the purchase price and can rise by no more than 2% a year, no matter how fast the market moves. After 20 or 30 years, the gap between taxable value and market value can be enormous.
Consider a couple who bought their home in 1996. It is worth $1,200,000 today but is taxed on a value of about $350,000. Their bill is roughly $4,400 a year. If they sold and bought an $850,000 home under the old rules, the new home would be taxed on $850,000, about $10,600 a year. They would be downsizing into a tax bill more than twice as large.
Before 2021, relief was limited. Propositions 60 and 90 allowed a one-time transfer, only to a home of equal or lesser value, and only within the same county or to a handful of counties that accepted transfers. Prop 19 replaced those rules with broader ones.
Who Qualifies
- You or your spouse is at least 55 when the original home is sold. Severely disabled homeowners and victims of a wildfire or natural disaster also qualify, under separate claim forms.
- The home you sell is your primary residence. You must have owned and lived in it at the time of sale, or within two years of buying the replacement.
- The home you buy becomes your primary residence. Second homes and rentals do not qualify.
- You buy or build the replacement within two years of selling the original. You can buy first or sell first.
- Both homes are in California. The replacement can be in any of the 58 counties.
You can use the transfer up to three times. If you already used a one-time transfer under Prop 60 or 90, it does not count against those three.
How Your New Taxable Value Is Calculated
The calculation compares what the new home cost with what the old home sold for. The comparison gets more generous the longer you wait to buy after selling.
| When You Buy the Replacement | Counts as "Equal or Lesser Value" If It Costs Up To | On a $1,000,000 Sale |
|---|---|---|
| Before you sell the original | 100% of the original's sale value | $1,000,000 |
| In the first year after the sale | 105% of the original's sale value | $1,050,000 |
| In the second year after the sale | 110% of the original's sale value | $1,100,000 |
If the new home is within that limit, your old taxable value moves to the new home unchanged.
If the new home costs more than the limit, the amount over the limit is added to your old taxable value. You still keep most of the benefit.
The figures in this article are examples only. Tax rates vary by location; the examples use 1.25% of taxable value.
Example 1: Downsizing to a Less Expensive Home
You sell your Thousand Oaks home for $1,200,000. Its taxable value is $350,000. Six months later you buy a home in La Quinta for $850,000.
| Without Prop 19 | With Prop 19 | |
|---|---|---|
| Taxable value of the new home | $850,000 | $350,000 |
| Estimated property tax per year | $10,625 | $4,375 |
| Estimated property tax per month | $885 | $365 |
| Yearly savings | $6,250 |
Example 2: Buying a More Expensive Home
You sell your home for $900,000. Its taxable value is $300,000. In the first year after the sale you buy a home for $1,100,000.
- The limit is 105% of $900,000, or $945,000.
- The new home costs $155,000 more than the limit ($1,100,000 minus $945,000).
- Your new taxable value is $300,000 plus $155,000, or $455,000.
| Without Prop 19 | With Prop 19 | |
|---|---|---|
| Taxable value of the new home | $1,100,000 | $455,000 |
| Estimated property tax per year | $13,750 | $5,688 |
| Yearly savings | $8,062 |
Deadlines and Paperwork
- Two years. The sale and the purchase must be within two years of each other.
- The form. File BOE-19-B with the assessor in the county where the new home is located. The transfer is not automatic.
- Three years to file. File within three years of buying the replacement home and the lower value applies back to your purchase date. File later and the relief generally applies only going forward.
- Expect a correction. Until the assessor processes your claim, your first tax bills on the new home may be based on the purchase price. Once the claim is approved, the bill is corrected.
Forms and county assessor contacts are available from the California State Board of Equalization.
What Prop 19 Does Not Do
- It does not reduce Mello-Roos or special assessments. Those are tied to the new property and are billed in full. Many newer communities in the Coachella Valley have them, so check the tax bill of any home you are considering.
- It does not apply to second homes or rentals. Both the old and new homes must be your primary residence.
- It does not lower HOA dues or insurance. Budget for those separately.
- It does not freeze your taxes. The transferred value still rises up to 2% a year, as it did before.
To see how Mello-Roos, HOA dues, and other costs affect the cash you need, try our cash to close calculator.
How to Finance a Downsizing Move
The tax transfer is only half of the plan. The other half is how you pay for the new home, and in what order you buy and sell.
Buying Before You Sell
Most people would rather move once. A bridge loan uses the equity in your current home to fund the purchase of the next one, so you can make an offer without a sale contingency. Keep the table above in mind: when you buy first, the comparison is at 100% of your eventual sale value, not 105% or 110%.
No Monthly Mortgage Payment After 62
If you are 62 or older, a reverse mortgage for purchase lets you put down a large share of the price from your sale proceeds and finance the rest with no required monthly mortgage payment. You remain responsible for property taxes, insurance, and upkeep. Combined with a Prop 19 tax base, it can make the cost of living in the new home very low.
Qualifying on Assets Instead of Income
Retirees often have substantial savings but modest taxable income. An asset depletion loan converts your liquid assets into qualifying income, so you can keep more of your sale proceeds invested.
How the Lower Tax Bill Affects Qualifying
Lenders count property taxes in your monthly payment. Until the assessor approves your claim, many lenders qualify you using taxes based on the purchase price. Tell us early that you plan to use Prop 19, and we will structure the loan with that in mind.
A Note on Passing a Home to Your Children
Prop 19 also changed the rules for inherited property, and not in the family's favor. Since February 16, 2021, a child keeps the parent's taxable value only if the home was the parent's primary residence and the child moves in and makes it their own primary residence. Even then, there is a cap: if the home's market value exceeds the parent's taxable value by more than $1,044,586 (the figure for transfers from February 16, 2025 through February 15, 2027), the excess is added to the child's taxable value. Rental and vacation properties are reassessed at market value.
If keeping a home in the family is part of your thinking, talk with an estate planning attorney before you decide whether to sell.
A Step-by-Step Plan
- Find your current taxable value. It is on your property tax bill as the assessed value.
- Estimate your sale price and the price range of the home you want.
- Run the numbers using the 100%, 105%, and 110% limits to see your new taxable value.
- Decide whether to buy first or sell first, and line up the financing to match.
- Get pre-approved so you can move quickly when the right home appears.
- Close both transactions within two years of each other.
- File form BOE-19-B with the assessor in the new county, and keep both closing statements.
The Bottom Line
For homeowners 55 and older, Prop 19 removes the biggest penalty for moving. You can sell the home that no longer fits, buy one that does anywhere in California, and keep most or all of the property tax base you have built up over the years.
The details matter: the two-year window, the order of buying and selling, and the way you finance the purchase all affect the outcome. We can help you plan the financing side, whether that is a bridge loan, a new purchase loan, or a reverse mortgage. For the tax side, confirm your situation with your county assessor or tax advisor.
Thinking about downsizing?
Call Bill Lewis at (310) 614-5920 to map out the sale, the purchase, and the financing in the right order.
Get a Free ConsultationFrequently Asked Questions About Prop 19
What is the Prop 19 property tax transfer?
Proposition 19 lets California homeowners who are 55 or older, severely disabled, or victims of a wildfire or natural disaster sell their primary residence and transfer its taxable value to a replacement primary residence anywhere in the state. The rule took effect on April 1, 2021.
Can I buy a more expensive home and still use Prop 19?
Yes. If the new home costs more than the allowed percentage of your old home's sale value, the difference is added to the taxable value you bring with you. You still pay far less than you would if the new home were taxed at its full purchase price.
How long do I have to buy the replacement home?
You must buy or build the replacement home within two years of selling your original home. You can also buy first and sell afterward, as long as the two transactions are within two years of each other.
How many times can I use Prop 19?
Homeowners 55 and older and severely disabled homeowners can transfer their taxable value up to three times. A transfer made under the older Proposition 60 or 90 rules does not count against the three.
Does Prop 19 lower Mello-Roos or special assessments?
No. Prop 19 transfers the assessed value used for the basic property tax. Mello-Roos, HOA dues, and fixed special assessments belong to the new property and are billed in full.
How do I apply for the Prop 19 transfer?
File form BOE-19-B, Claim for Transfer of Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years, with the assessor in the county where the new home is located. File within three years of buying the replacement home to receive the benefit back to the date of purchase.
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About the Author: Bill Lewis
Mortgage Loan Originator, Choice One Mortgage · NMLS #284797
Bill Lewis has spent more than 30 years helping Southern California homebuyers and the Realtors who serve them structure financing that fits their real situation. Based in La Quinta, Choice One Mortgage serves buyers throughout the Coachella Valley, Ventura County, and the South Bay. Learn more about our team or call (310) 614-5920.
This article is general information, not tax or legal advice. Proposition 19 rules are administered by county assessors and the California State Board of Equalization, and the facts of your situation determine whether you qualify; confirm with your county assessor or a tax professional before you act. Tax figures are examples only and use an estimated rate of 1.25%. This is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines, and property valuation. Equal Housing Opportunity. COMC, Inc. dba Choice One Mortgage Company. Licensed by the CA DRE #01238593. NMLS #233784.