Calculating Property Tax Reassessment for Prop 19

October 27, 2023

By Mary Korkodian, Trust & Real Estate Attorney

More than 2 years after the passing of California’s Proposition 19, there remains much confusion about how to calculate a potential property tax reassessment in the event of a change in ownership. 

Prior to Prop 19, a parent could transfer a principal residence with unlimited value to a child and avoid reassessment.  After Prop 19, only an additional $1 Million of assessed value is excluded from reassessment for a principal residence, and all investment properties, vacation homes, and second homes within California get completely reassessed when passing to non-spouses.

Calculating Property Tax Reassessment for Parent-Child Transfer of Principal Residence: 

Step 1: Determine the property’s existing assessed value (indicated on the property tax bill)

Step 2: Add $1M to the property’s existing assessed value to determine the baseline value

Step 3: Determine fair market value as of date of transfer

Step 4: Determine if baseline value (from Step 2) is less than, or greater than, the fair market value (from Step 3).  If less than, there is no reassessment.  If greater than, proceed to Step 5. 

Step 5: Determine by how much the fair market value (from Step 3) exceeds the baseline value (from Step 2).  Add that number to the existing assessed value (from Step 1) to get your new assessed value. 

Step 6: Determine your County’s tax rate percentage (including ad valorem and miscellaneous fees depending on municipality).  To determine this, look for the “TRA” on your property tax bill, then enter that number in https://auditor.lacounty.gov/tax-rate-area-lookup/ to get the Total Year Tax Rate.  For example, if your property tax bill says the TRA is “00013”, enter just “13” on the Los Angeles County Auditor-Controller’s website, and you will see a 2022/2023 tax rate of 1.16552%. 

Step 7: Multiply the Total Year Tax Rate (from Step 6) by the new assessed value (from Step 5). 

Example 1:

Step 1: Existing Assessed Value = $500,000

Step 2: Baseline = $1,500,000 ($1M + $500,000)

Step 3: Fair Market Value = $1,300,000

Step 4: Fair Market Value less than Baseline.  No reassessment. 

Example 2:

Step 1: Existing Assessed Value = $500,000

Step 2: Baseline = $1,500,000 ($1M + $500,000)

Step 3: Fair Market Value = $1,700,000

Step 4: Fair Market Value greater than Baseline.  There will be a reassessment.

Step 5: Fair Market Value greater than Baseline by $200,000 ($1,700,000 – $1,500,000). Thus, the new assessed value is $700,000 ($200,000 + $500,000).

Step 6: County tax rate is 1.16552%.  

Step 7: 1.16552% x $700,000 = $8,158 per year in property taxes

If you would like to consult with an attorney about your particular situation, or are interested in property tax planning, the qualified attorneys at Baker, Burton & Lundy are here to help.  

Please note: This document does not constitute legal advice. Please consult an attorney for legal advice on what to do in a particular situation.

CONTACT US TODAY

We're here for all of your legal needs.

310-376-9893