Prop 19 and the heir who won't move in

Ask a family why they're selling their parents' house and you'll hear about the roof, the siblings, the drive from Reno. Keep listening and the property tax bill usually comes up. Since 2021, that bill is the reason a lot of inherited California houses end up for sale.

What changed in 2021

Before Proposition 19, a parent could pass a house to a child and the child kept the parent's assessed value, no matter where the child lived. A house bought in 1978 for $60,000 could stay on the tax roll at a tiny fraction of its market value for another generation, even as a rental or a vacation place.

Prop 19 narrowed that. For transfers after February 16, 2021, the parent-child exclusion only applies to a family home that becomes the child's principal residence, and the child has to file for the homeowners' exemption within a year. Even then, the exclusion is capped. If the house is worth much more than its old taxable value, the excess gets added to the assessment. The Board of Equalization's Prop 19 pages lay out the cap and the filing rules, and the cap is adjusted every two years.

What that looks like for a real family

Picture three adult kids inheriting a paid-off house in Fresno. One lives in Denver, one in Sacramento, one around the corner but in her own house. Nobody plans to move in. Under the old rules they could have rented it out at the parents' tax base. Under Prop 19, the county reassesses it to market value, and the yearly tax bill can jump by thousands of dollars.

Now add the insurance on an older house, a roof at the end of its life and three people who disagree about who pays for what. Selling starts to look like the only thing they can all agree on. That's the conversation an investor walks into.

The tax side heirs often get wrong

A lot of heirs worry about capital gains, and that worry slows them down. In most cases it's overblown. Inherited property generally gets a stepped-up basis, so its cost for tax purposes resets to roughly its value on the date of death. If the family sells within a year or two, the taxable gain is often small. IRS Publication 559 covers how basis works for survivors and executors.

You shouldn't give tax advice, and you don't need to. But knowing this helps you understand why one heir is stalling, and it's fair to suggest they ask their tax preparer before turning down a reasonable offer.

The bill that shows up later

There's a timing detail that surprises heirs. A change in ownership triggers a reassessment as of the date it happened, and in California that often arrives as a supplemental tax bill months later. A family that has been paying the parents' old tax bill for a year can suddenly get a bill for the difference, covering the months since the death.

That bill can turn a family that was "thinking about it" into sellers within a few weeks. If you're following up on inherited-property leads, the arrival of supplemental bills is a natural reason to check in. The county assessor handles the reassessment, and in Fresno that's the Fresno County Assessor, where you can also look up the parcel.

Rentals are their own case. If the parents had a tenant, the heirs inherit the lease along with the house, and the tenant's protections stay in place. Many families don't want to be landlords, which is one more reason these houses come to market.

How to work these leads

Inherited-property leads behave differently from probate leads, even though they often overlap. Sometimes the house went through probate and the estate is closed. Sometimes it passed through a trust and never saw a courtroom. Sometimes the heirs are still deciding whether to sell at all.

A few things that help:

• Find out who actually holds title. A successor trustee can usually sign alone. A group of heirs who inherited outright all have to sign.
• Ask whether anyone has filed for the parent-child exclusion. If nobody is moving in, reassessment is coming, and the family may not have done the math yet.
• Offer to take the house as it is, contents included. Clearing out a parent's house is one of the hardest jobs a family faces, and it delays sales more than price does.
• Put your offer in writing and send it to every decision maker at once. Side conversations with one sibling create problems later.

Where the leads come from

Some investors find inherited houses through probate filings, others through tax records that show a change in ownership or a mailing address out of state. You can also buy inherited property leads where a family member reached out about selling. Each source finds families at a different point, and the earlier you reach them, the more patience the deal will need.

If you want a refresher on the court process these families go through, the California courts' probate self-help center explains it from their side.

I keep coming back to one point with inherited houses. The family is rarely selling because they want to. They're selling because the tax bill, the roof and the distance made keeping it unworkable. Buyers who understand that, and don't push, get the call back. If you're looking for these sellers in California specifically, caloffers.com is one place they show up.

This is general information about Proposition 19 and inherited property, not tax or legal advice.