At Lucas Real Estate Group, we’ve been at the forefront of helping California families navigate the dramatic implications of Proposition 19, which we’ve long viewed as a death tax on inherited real estate—particularly painful for families in high-value areas like Newport Beach, Eastside Costa Mesa, and the rest of Coastal Orange County.
While some benefits exist under Prop 19 for senior homeowners (portability of property tax base), the restrictions on parent-child transfers of property have blindsided many families who had planned to pass down their low Prop 13 tax basis. One small bit of relief: the limited exclusion amount tied to intergenerational transfers is adjusted for inflation every two years.
What’s New in 2025?
On March 7, 2025, the California State Board of Equalization (BOE) officially announced the new adjusted exclusion cap for transfers occurring between February 16, 2025, and February 15, 2027.
New Exclusion Amount: $1,044,586
Effective Dates: February 16, 2025 – February 15, 2027
Prior Amount (2023–2025): $1,022,600
Initial Cap (2021–2023): $1,000,000
This figure is calculated based on the Federal Housing Finance Agency’s House Price Index for California, which showed a 2.15% increase in home values for 2024.
Commentary: Once again, this “inflation adjustment” does not seem to comport with the actual inflation of real estate over this timeframe.
What This Means for You
To qualify for the intergenerational transfer exclusion under Proposition 19 (refresher):
- The property must have been the primary residence of the parent or grandparent at the time of transfer.
- The child or grandchild must make the property their primary residence within one year.
- The property’s fair market value at time of transfer must not exceed the old base year value plus $1,044,586.
- Partial relief is available if the fair market value exceeds that cap, but anything above will be added to the tax basis, increasing annual property taxes significantly.
Why It Matters in Coastal Orange County
Even with the increased cap, $1,044,586 barely moves the needle for families in high-value areas like Newport Beach, Corona del Mar, Laguna Beach, or even Eastside Costa Mesa. Median home prices in these neighborhoods often exceed $2 million, making it nearly impossible to qualify for the full exclusion.
Despite the inflation adjustment, many families will still face dramatic property tax increases when attempting to pass down a home.
What You Can Do: Planning Is Critical
If you are considering transferring your property to children or other heirs, now is the time to consult professionals who understand how to structure these transactions within the bounds of current tax law.
At Lucas Real Estate Group, we are uniquely qualified to assist, offering:
- Legal expertise in real estate and estate planning
- Tax insight from our in-house CPA
- A deep understanding of Newport Beach and coastal real estate markets
- Experience with confidential, complex, and off-market family transfers
- Proven guidance for trustees, out-of-state heirs, and high-net-worth families
Let’s Talk
Thinking of selling California real estate? We would love the opportunity to assist – we provide full service sales and property management in Newport Beach, Costa Mesa and surrounding areas. If you are seeking to sell or professionally manage your home in Newport Beach, Costa Mesa or the surrounding areas, call or email anytime for a free brief consultation – [email protected] or 949-478-1623.
Want to discuss tax planning, tax considerations or real estate legal matters? We conduct paid one-hour confidential consultations via Zoom, walking families through Prop 19 impacts, potential tax exposure, capital gains considerations, and the pros and cons of gifting, sales, LLCs, or hybrid solutions. For discussions requiring real estate legal advice, private family sales, family transfers, or tax-related matters, please schedule a paid one-hour consultation via Zoom, phone, or in person using this calendar (Book a consultation here.) Upon booking, you’ll receive instant confirmation and a Zoom link if applicable.
Whether you’re a local homeowner, out-of-state trustee, or simply trying to preserve your family’s generational wealth, Lucas Real Estate Group can help.
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Lucas Real Estate Group is a top-rated residential real estate team based in Newport Beach, led by Devin R. Lucas – a Real Estate Attorney, Broker, and REALTOR®, and Courtney Lucas – CPA and REALTOR®. We specialize in trust sales, intra-family transfers, luxury transactions, and confidential representation, offering unmatched experience in California property tax law, Proposition 19, and beyond.
Serving Newport Beach, Eastside Costa Mesa, and surrounding Orange County communities
(949) 478-1623 | ✉️ [email protected]
www.lucas-real-estate.com
2901 West Coast Highway, Suite 200, Newport Beach, CA 92663
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– Devin Lucas
Author Devin R. Lucas is a Real Estate Broker, REALTOR® and Real Estate Attorney specializing in Newport Beach, Costa Mesa, and Orange County coastal communities. Courtney Lucas, a licensed CPA, Real Estate Salesperson, and REALTOR®, provides expert financial insight alongside real estate services. Together, they lead Lucas Real Estate, operating in conjunction with Coldwell Banker, the region’s premier luxury brokerage.
Lucas Real Estate offers unmatched expertise in California real estate sales, property management, capital gains strategies, and property tax matters, including Propositions 13, 58, 193, 60, 90, and new Proposition 19.
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sources:
- BOE News Release, March 7, 2025, “BOE Adjusts the Proposition 19 $1 Million
Intergenerational Transfer Exclusion Amount”, https://aws.boe.ca.gov/news/2025/NR-25-02.htm
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