Your Next Home Can Fit Your Life Better, Without Starting Over on Property Taxes

If you have owned your San Diego home for many years, moving can create a frustrating problem.

You may be ready for fewer stairs, less maintenance, a smaller yard, or a home closer to family. But selling could mean walking away from a very low Proposition 13 property-tax assessment.

California Proposition 19 may allow eligible homeowners age 55 or older to transfer the taxable value of their current primary residence to another primary residence anywhere in California. The benefit can be used up to three times, and the replacement home does not necessarily have to cost less.

You do not need to decide whether to sell today. Start by finding out what the move could look like.

Request a Prop 19 Downsizing Plan

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What Does Prop 19 Do for San Diego Homeowners Over 55?

Prop 19 allows a qualifying homeowner to take the factored base-year value of a current California primary residence and transfer it to a replacement primary residence elsewhere in the state.

In practical terms, that may let you move without having the entire purchase price of your next home become your new taxable value.

To qualify:

• You must be at least 55 years old when your original home is sold.
• Your original property must be sold.
• The original and replacement properties must qualify as your primary residences.
• You must purchase or complete construction of the replacement home within two years before or after the sale.
• You must own and occupy the replacement property when the claim is filed.
• The benefit may be used up to three times.

If one spouse is at least 55 and the other is not, the couple may still qualify. The qualifying spouse generally needs to have an ownership interest in both the original and replacement properties at the relevant times.

Downsizing Does Not Have to Mean Buying a Cheaper Home

This is one of the most misunderstood parts of Prop 19.

You can purchase a more expensive replacement home and still transfer your existing taxable value. When the replacement exceeds Prop 19’s allowable comparison value, the excess is added to the taxable value being transferred.

The allowable comparison depends on when you purchase the replacement home:

• Before selling: The replacement can be up to 100% of the original home’s market value without an adjustment.
• Within the first year after selling: The replacement can be up to 105%.
• Within the second year after selling: The replacement can be up to 110%.

If the new property exceeds the applicable amount, only the excess is added to your transferred taxable value.

That matters in San Diego, where a homeowner may sell a large two-story property but purchase a smaller single-level home in a more expensive coastal location.

The new house may have less square footage, but it could still cost as much—or more—because of the location, view, condition, community, or lot.

A Simple Prop 19 Example

Assume your current home has:

Estimated market value: $2,000,000
Current taxable value: $400,000

You sell the property and purchase a replacement home for $1,800,000 within the first year.

Because $1,800,000 is less than 105% of the original home’s $2,000,000 market value, your approximately $400,000 taxable value may transfer to the replacement property, subject to confirmation by the County Assessor.

Now assume the replacement home costs $2,400,000.

The first-year comparison amount would be:

$2,000,000 × 105% = $2,100,000

The replacement property exceeds that amount by $300,000. That $300,000 would generally be added to the transferred $400,000 base, producing an estimated new taxable value of approximately $700,000—not the full $2,400,000 purchase price.

This is only an illustration. The Assessor determines market values and final eligibility.

Can You Buy the New Home Before Selling?

Yes.

Prop 19 allows the purchase of the replacement property to happen before or after the sale, as long as the transactions fall within the required two-year window.

There is, however, an important cash-flow consideration.

If you buy the replacement home before selling the original property, the replacement will initially be taxed based on its full assessed value. The transferred base-year value does not take effect until the original residence is sold, and the BOE states that there is no refund for the period between the replacement purchase and the original sale.

That is one reason the order and timing of the two transactions should be planned before either home enters escrow.

Talk With Jeff About Sale and Purchase Timing

What Kind of Home Would Make Life Easier?

Downsizing is not always about finding the smallest or least expensive house.

For many of my clients, it means finding a property that removes the parts of homeownership they no longer want while keeping the parts of San Diego living they still enjoy.

That might mean:

• A true single-level home with no interior steps
• A smaller lot with less maintenance
• A lock-and-leave condominium or townhome
• A gated community
• A newer home with fewer immediate repairs
• A first-floor primary suite
• A property closer to children or grandchildren
• A coastal home within walking distance of shops and restaurants
• A residence with room for guests but less unused space

Public listings only show part of the available inventory. LuxeAlly also tracks private, off-market, future, and coming-soon properties throughout North County and coastal San Diego.

Get the Weekly Off-Market Home List

How to Approach a Prop 19 Downsizing Move

1. Estimate the Value of Your Current Home

The eventual sale value affects both your buying power and the Prop 19 calculation.

A realistic valuation should consider your home’s condition, lot, location, recent comparable sales, likely buyer demand, and whether an off-market or public sale would be more appropriate.

Discuss Selling Your San Diego Home

2. Confirm Your Current Taxable Value

Your taxable value is not the same as your property’s market value.

Review your current tax bill or look up your assessed value through the San Diego County Assessor. That number becomes the starting point for estimating how Prop 19 might affect your replacement home.

3. Identify the Right Type of Replacement Property

Before making a sale decision, determine what you actually want from the next home.

Location, stairs, yard size, HOA services, proximity to family, medical care, shopping, security, and future accessibility may matter more than simply reducing square footage.

4. Model the Timing

Decide whether selling first, buying first, or coordinating concurrent transactions is most practical.

The answer may depend on your available cash, financing, comfort with temporary housing, the marketability of your current home, and how difficult the replacement property will be to find.

5. Confirm the Tax Treatment

A real estate agent can help coordinate the sale, search, valuations, and timing. Final Prop 19 eligibility and tax calculations should be confirmed with the County Assessor and your tax or legal adviser.

Filing for the Prop 19 Tax-Base Transfer

The transfer is not handled automatically through escrow.

Once both transactions have been completed and you are living in the replacement property, you file the claim with the Assessor in the county where the replacement property is located.

For a replacement property in San Diego County, qualifying homeowners generally use Form BOE-19-B. San Diego County instructs homeowners to file within three years of purchasing or completing construction of the replacement residence to receive the full available relief. Claims filed later may receive prospective relief beginning in the year filed.

Useful resources:

California Board of Equalization Prop 19 Overview

San Diego County Property Tax Relief for Seniors

Download San Diego County Form BOE-19-B

San Diego County Prop 19 questions may also be directed to [email protected] or 619-531-5481.

Prop 19 Does Not Eliminate Capital-Gains Tax

Prop 19 deals with California property-tax assessments. It does not eliminate federal or California capital-gains taxes created by selling an appreciated home.

The IRS may allow qualifying homeowners to exclude up to $250,000 of gain individually or up to $500,000 for certain married couples filing jointly. Longtime San Diego owners whose gains exceed those amounts should discuss their adjusted cost basis, improvements, selling expenses, and possible taxable gain with a qualified tax professional.

For a broader explanation, read:

How to Reduce the Tax Impact When Downsizing a San Diego Home

Prop 19 and Inherited Property

The downsizing benefit for homeowners over 55 is different from Prop 19’s parent-child and grandparent-grandchild inheritance rules.

For transfers occurring under the current law:

• The property generally must have been the transferor’s primary residence.
• At least one qualifying heir must make it a primary residence.
• A Homeowners’ or Disabled Veterans’ Exemption must be filed within one year to preserve the full benefit.
• The separate exclusion claim generally must be filed within three years or before the property is transferred to another party.
• Second homes, rentals, and other non-primary-residence properties generally do not receive the former Prop 58 treatment.

For transfers occurring between February 16, 2025, and February 15, 2027, the current exclusion calculation is capped at the property’s taxable value plus $1,044,586. A portion above that amount may be added to the new assessed value.

Properties held through LLCs, partnerships, corporations, older trusts, life estates, or complicated estate plans deserve additional review before a transfer. Legal-entity ownership and trust provisions can produce very different reassessment outcomes.

San Diego County Parent-Child Exclusion Information

You May Have More Options Than You Think

A lot of longtime homeowners stay in a property that no longer fits because moving appears financially impractical.

Sometimes staying is the right decision.

But before making that assumption, it is worth comparing:

• The likely net proceeds from selling
• Your current and projected property taxes
• The cost of maintaining the existing property
• The price and availability of suitable replacement homes
• The value of transferring your taxable base
• The practical benefits of a home designed for the next stage of life

My role is not to give tax or legal advice. It is to help you understand the real estate side of the decision: what your home may sell for, what replacement properties actually exist, and how the two transactions could be coordinated.

There is no obligation to sell simply because we explore the numbers.

Request a Private Prop 19 Downsizing Conversation

Jeff Toth
Founding Partner, LuxeAlly Real Estate
858-630-8997
DRE #01969791