Proposition 19 and the one-year deadline
California Proposition 19, effective February 16, 2021, narrowed the rules for transferring a parent's low property tax basis to an inheriting child. Under current law, a child can keep the parent's low assessed value only if the home was the parent's principal residence and the child makes it their own principal residence and files for the homeowners' exemption within one year of the transfer. The low value carries over only up to an inflation-adjusted cap ($1,044,586 above the parent's assessed value for transfers from February 16, 2025 to February 15, 2027); any gap above that is added. If multiple siblings inherit the home, the exclusion can cover all of their inherited shares as long as one of them lives there. No buyout is required, but if one sibling later buys the others' shares, those shares are reassessed.
The savings from preserving the exclusion can be enormous. A parent who bought a home in 1980 for $120,000 may have an assessed value of $200,000 today, while the home's market value has grown to $1.2 million. Annual property taxes at the low assessed value might be around $2,400. Annual taxes after reassessment at market value could exceed $12,000. That is a difference of nearly $10,000 per year, year after year, for as long as the heir owns the property.
A Prop 19 equalization loan from North Coast Financial lets the trust or estate pay the other heirs their shares quickly, so one heir can receive the home, move in and file for the homeowners' exemption within the one-year deadline, and file the BOE-19-P form with the county assessor (due within three years). We fund these loans in about 7 days once the file is complete. Use the calculator below to estimate the savings for your family's specific property.
Enter Your Numbers
These are estimates assuming constant assessed value, tax rate, and market value. Actual savings will vary based on annual reassessment limits, future market changes, and county-specific rates. Consult a property tax advisor for a precise analysis.
Call 760-722-2991 to Discuss an Equalization LoanHow an equalization loan works
When two or three siblings inherit a parent's home and one wants to keep it, the others usually want their shares in cash. If the trust or estate does not have the cash on hand, an equalization loan to the trust or estate, secured by the property, provides the funds. The loan is funded quickly, the co-heirs are paid, and the trustee distributes the home, subject to the loan, to the keeping sibling. In probate, the executor pays the co-heirs, and the court's order of distribution gives the home to the child who stays. The keeping sibling moves in and files for the homeowners' exemption within one year and files the BOE-19-P form with the county assessor (due within three years). If the keeping sibling instead borrows personally to buy the others' shares, those shares are reassessed.
The keeping sibling then either refinances the equalization loan into a conventional mortgage once they qualify, or repays it from other sources. The property tax savings over time typically far exceed the cost of the equalization loan, making it one of the most financially sound short-term loans a California heir can take.
North Coast Financial funds Prop 19 equalization loans throughout California. Rates run from 9.95% to 10.5% with origination of 1.25 to 1.95 points, no prepayment penalty, no appraisal fee, and no lender document fees. Minimum loan $30,000. Call 760-722-2991 to get started.