How San Diego Homeowners Can Move WITHOUT Increasing Property Taxes

Lightly edited for readability.

Why moving usually costs more

Under Prop 13, California property taxes are based on your purchase price, with increases capped at 2% a year, not on the home's current market value. Because California real estate tends to appreciate quickly, there's often a large gap between what you're paying property taxes on and what the home would actually reassess to if sold today. That gap resets the moment you buy a new property, so even downsizing to a smaller, cheaper home can mean a higher property tax bill than what you're paying now, which is often enough to keep people from moving at all.

What Prop 19 changes

Prop 19 lets eligible homeowners transfer their existing tax basis to a new home instead of resetting it. You must be 55 or older, it works anywhere in California, not just San Diego County, and you can use it up to three times in your lifetime, not just once. It's one of the most underused tools available to San Diego homeowners; most people simply don't know it exists when they're deciding whether to sell.

How it actually works

You need to be 55 or older, and you have a two-year window between selling your old home and buying the new one to qualify, even if you rent in between. Buy a home for the same price or less than what you sold, and there's no tax increase at all. Buy for more, and you only pay additional tax on the difference in value, not on the full new purchase price.

A real example

Say you bought a home in 1995 for $180,000, and your tax basis has grown to about $325,000 today under the 2% annual cap. You sell it for $950,000 and buy a new home for $1,050,000, $100,000 more than your old sale price. Under Prop 19, that $100,000 difference gets added to your existing basis, bringing your new tax basis to $425,000, instead of resetting to the full $1,050,000 purchase price. In this example, that's the difference between roughly $12,600 a year in property taxes and about $5,100, a savings of around $7,500 every year.

What to know before you file

The transfer isn't automatic, you have to file a claim to actually get the lower basis. Timing matters, especially if you're building a new home and construction delays could push you past the two-year window. It pairs particularly well with a broader retirement plan for empty nesters looking to downsize and unlock home equity without losing the property tax rate they've built up over time. A second set of eyes, from a CPA, financial planner, or real estate professional, is worth it before you rely on this strategy.