As we approach September 19th, it’s important to take a moment to recognize the lasting impact of California Proposition 19 (Prop 19) on the real estate landscape. Whether you're buying or selling a home, or thinking about how your property might contribute to generational wealth, Prop 19 could open new opportunities for you.

Hi, I’m Nathan Derry with JohnHart Real Estate, and I take pride in helping my clients make informed, strategic decisions. Let’s break down Prop 19 and explore how it benefits both home buyers and sellers and has a significant effect on generational wealth.

What is Proposition 19?

Passed in 2020, Proposition 19 made key changes to how property taxes are assessed in California, particularly benefiting certain homeowners. The proposition has two main components:

1. Transfer of Tax Base
   Homeowners aged 55+, those with severe disabilities, or victims of natural disasters can now transfer the tax base of their existing home to a new home—anywhere in the state of California. And they can do this up to three times. This means you can sell your current property and buy a more expensive or similarly priced home without facing higher property taxes, providing incredible flexibility.

2. Changes to Inherited Property Rules
   Previously, children could inherit their parents' property and retain the lower tax base, regardless of whether they used it as their primary residence or rented it out. Under Prop 19, this tax benefit is now limited to properties that become the primary residence of the heir. If not used as a primary residence, the property is reassessed at current market value, which could lead to higher property taxes.

How Prop 19 Benefits Home Buyers and Sellers

For home buyers and sellers, Prop 19 offers the ability to transfer a lower tax base, which is a game-changer in high-demand, high-price areas like Los Angeles or San Francisco. This allows you to "move up" in terms of housing without being hit by a significant property tax hike.

Sellers, especially those looking to downsize, benefit because they can sell their homes, take advantage of the equity, and move to a more affordable or more appropriate home for their needs without a tax penalty. This also improves the housing supply for new buyers, as more homes become available on the market.

Generational Wealth Implications

One of the most significant effects of Prop 19 is on generational wealth. Homeowners have long used real estate as a way to pass down wealth to their children or heirs. With the changes made by Prop 19, families must now be more strategic about how they manage inherited properties.

If you plan to pass your home to your children, Prop 19 encourages you to think carefully about whether they will live in it. If they do, they can keep the lower tax rate, preserving wealth. But if they plan to sell or rent the property, it will likely be reassessed at current market value, possibly increasing the tax burden. This new rule may affect the long-term financial planning of families looking to leverage real estate to build generational wealth.

Making the Right Move

For anyone considering buying or selling, Prop 19 provides some clear financial advantages, particularly for those looking to downsize, relocate, or pass properties to family members. The flexibility it offers means you can make decisions based on your needs rather than being restricted by tax concerns.

Whether you’re thinking about upgrading, relocating, or ensuring your family’s long-term wealth, now is the time to understand how Prop 19 can work for you.

I’m Nathan Derry with JohnHart Real Estate, and I take pride in helping my clients make educated decisions. If you're ready to make the best move of your life, give me a call today!

All the best,

Nathan Derry

📍JohnHart Real Estate

📞(424) 303-0440

📧 nathan@jhagents.com

👨🏽‍💻 itsnathanderry.com

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