Who Gets the Prop 19 Property Tax Transfer in a California Divorce? The One-Spouse Rule Explained
You built this tax benefit together over decades. But only one of you can take it with you. Here's how to negotiate this $165,000+ asset in your settlement.
- Only one spouse can claim the Prop 19 property tax transfer in a California divorce, even if both qualify.
- Whoever files first with the county assessor gets the benefit. There's no mechanism to contest this.
- This benefit is worth $165,000+ over 10-15 years. It belongs in your property division negotiations.
- Your divorce settlement should specifically address who gets Prop 19 and what offset the other spouse receives.
The $165,000 Question Nobody Talks About
If you've owned your Los Angeles home for 20+ years, you're sitting on a hidden asset that doesn't show up on any balance sheet: your Prop 13 property tax base.
And if either you or your spouse is 55 or older, California's Proposition 19 lets you transfer that tax base to a replacement home anywhere in the state. This can save $15,000 or more per year in property taxes.
Here's the problem nobody tells you about in divorce: only one spouse can use it.
Not both. One.
And if you don't address this in your divorce settlement, it becomes a race to the county assessor's office. Whoever files first claims the benefit. The other spouse is out of luck, with no legal recourse.
This is one of the things I always bring up when I'm working with divorcing couples who've been in their home a long time. Most people have never heard of the one-spouse rule. Their attorneys often haven't either. And by the time they find out, the settlement is already finalized.
This is a benefit worth $165,000 or more. It belongs in your property division negotiations.
Prop 19 Basics: Quick Refresher
Before diving into the divorce implications, let's make sure you understand what Prop 19 offers.
Who Qualifies
You can use Prop 19 if you're:
- Age 55 or older, OR
- Severely disabled, OR
- A victim of a wildfire or natural disaster
Both the original home and replacement home must be your primary residence.
What It Does
Prop 19 allows you to transfer your property tax base from your current home to a replacement home anywhere in California.
Your current home:
- Purchased 1995 for $250,000
- Current assessed value for tax purposes: ~$400,000
- Current property tax: ~$4,000/year
If you sell and buy a new home worth $1,200,000:
- Without Prop 19: New property tax ~$12,000/year
- With Prop 19: Keep your ~$4,000/year base (adjusted for price difference)
- Annual savings: ~$8,000
Key Requirements
- Timing: Sale and purchase must occur within 2 years of each other
- Primary residence: Both homes must be your primary residence
- Lifetime uses: Up to 3 uses (increased from 1 under old Prop 60/90)
- Price adjustment: If replacement home costs more, the difference is added to your tax base
The Divorce Problem: Only One Spouse Can Claim It
Here's the rule that divorce attorneys frequently miss: Property Tax Rule 462.540(g)(2)(A)(iii).
When former spouses both qualify for Prop 19 and the marital home is sold, only one spouse can claim the property tax transfer benefit. The rule doesn't care that you both owned the home jointly. Only one person gets to use it.
First to File Gets the Benefit
Here's where it gets worse: the Prop 19 claim form (BOE-19-B) doesn't ask about divorce status. There's no checkbox for "Are you divorcing?" or "Have you coordinated with your ex-spouse?"
The form assumes you're acting alone. Whoever files first with the county assessor claims the benefit.
Why This Creates Conflict
After a divorce involving a long-held home:
- Both ex-spouses may be selling and buying replacement homes
- Both may be 55+ and qualify for Prop 19
- Both may assume they can use the benefit
- One files their claim
- The other discovers they can't use it. The benefit is gone.
There's no mechanism for the "losing" spouse to contest this if it wasn't addressed in the settlement.
How Much Is the Prop 19 Benefit Worth?
For long-held Los Angeles County homes, the Prop 19 benefit can be enormous.
Couple purchased home in Pasadena in 1990 for $300,000.
Current property tax situation:
- Assessed value (after 35 years of 2% max increases): ~$600,000
- Property tax at 1.1% effective rate: ~$6,600/year
If home were reassessed at current market value:
- Current market value: $1,800,000
- Property tax at 1.1%: ~$19,800/year
Annual Prop 19 benefit: $13,200/year
Long-Term Value
| Timeframe | Annual Benefit | Cumulative Value |
|---|---|---|
| Year 1 | $13,200 | $13,200 |
| Year 5 | $13,200 | $66,000 |
| Year 10 | $13,200 | $132,000 |
| Year 15 | $13,200 | $198,000 |
This is real money. Over 10-15 years of retirement, the Prop 19 benefit can exceed $165,000.
This is a lot to think about during an already difficult time.
You shouldn't have to become a property tax expert while going through a divorce. I can help you understand what this benefit is actually worth in your situation.
(213) 444-2225Call or text. Confidential, no pressure.
Negotiating Prop 19 in Your Settlement
If either spouse qualifies for Prop 19, this must be part of your divorce negotiations.
When I help couples work through this, I encourage them to think about it from a practical standpoint rather than an emotional one. Who actually needs the tax savings more? Who's staying in California? Who's buying sooner? Once you take emotion out of it, the right answer usually becomes clear.
Who Should Get the Benefit? Factors to Consider
Age matters: If one spouse is 62 and one is 52, only the older spouse currently qualifies. But the younger spouse may turn 55 before selling their replacement home.
Plans matter: Does one spouse plan to downsize in California while the other moves out of state? The out-of-state mover can't use Prop 19 anyway.
Need matters: Is one spouse in a significantly weaker financial position? The property tax savings may matter more to them.
Health matters: Is one spouse likely to remain in their replacement home longer? The longer you stay, the more valuable the benefit.
Valuing the Benefit for Asset Division
If one spouse gets Prop 19, how do you account for its value?
Option 1: Calculate present value. Estimate annual savings × expected years of benefit, discounted to present value. Example: $13,200/year × 10 years = $132,000 (simplified, without discounting)
Option 2: Offset with other assets. The spouse who doesn't get Prop 19 receives additional value from other assets in the division.
Option 3: Cash payment. The spouse receiving Prop 19 pays the other spouse a negotiated amount for the benefit.
What If You Don't Address It?
If your divorce settlement is silent on Prop 19, you're creating a potential conflict.
The Race to File Scenario
Divorce finalizes. Both spouses sell the marital home and buy replacement properties. Both assume they can use Prop 19. Spouse A files their claim. Spouse B files their claim.
County assessor processes claims in order received. Spouse A gets the benefit. Spouse B is denied.
Spouse B has no recourse. The settlement didn't address it. The law allows only one claim.
Don't let this become another source of conflict.
I've seen ex-spouses end up in disputes over Prop 19 because nobody told them about the one-spouse rule. Let's make sure that doesn't happen to you.
Call or Text: (213) 444-2225Everything we discuss stays between us.
Working with Your Attorney on This
Most family law attorneys know about capital gains and property tax basics. Fewer understand the Prop 19 one-spouse rule.
Questions to Raise
Ask your attorney:
- "How does Prop 19 affect our property division?"
- "Which of us should get the Prop 19 benefit?"
- "How do we value this benefit for offset purposes?"
- "What language should be in the settlement?"
Settlement Language to Include
Your settlement should include language such as:
"[Spouse Name] shall have the exclusive right to claim the Proposition 19 property tax transfer benefit in connection with the sale of the marital residence and purchase of a replacement property. [Other Spouse Name] waives any right to claim such benefit. The value of this benefit has been considered in the overall property division."
Frequently Asked Questions
Can both spouses use Prop 19 if we divorce?
No. Under Property Tax Rule 462.540(g)(2)(A)(iii), only one spouse can claim the Prop 19 property tax transfer benefit when a marital home is sold in divorce. Even if both spouses are over 55 and otherwise qualify, only one can use it.
Does it matter that we both owned the home jointly?
No. Joint ownership during marriage does not create two Prop 19 claims. The benefit is attached to the property, and only one transferring owner can claim it. This is why it must be negotiated in your settlement.
What if we both file Prop 19 claims?
The first claim processed by the county assessor will be approved. The second will be denied. There is no mechanism for the second filer to contest this if your divorce settlement did not address it.
Can we use Prop 19 if we owned the home before marriage?
Yes, the original ownership date does not affect Prop 19 eligibility. What matters is whether the home is your current primary residence, whether you meet age, disability, or disaster requirements, and whether timing and replacement home requirements are met. The divorce limitation still applies.
Your Next Steps
If either spouse is 55+ and you've owned your home for many years:
- Calculate your potential Prop 19 benefit (current tax vs. reassessed tax)
- Discuss with your attorney how to address this in settlement
- Determine which spouse should receive the benefit
- Agree on any offset or valuation for property division
- Document the agreement clearly in your decree
- Call or text (213) 444-2225 to discuss your specific situation
You've Built This Benefit Together. Let's Make Sure It's Divided Fairly.
The Prop 19 one-spouse rule catches many divorcing couples off guard. Before you finalize your settlement, let's make sure you understand your options and don't leave money on the table.
Call or Text: (213) 444-2225Available 7 days a week. Confidential conversation, no obligation.
Disclaimer
The information provided in this guide is for educational purposes only and does not constitute legal, tax, or financial advice. Property tax laws are complex and subject to change. Please consult with a qualified tax professional and family law attorney for guidance specific to your situation. Justin Borges and The Borges Real Estate Team are real estate professionals, not attorneys or tax advisors.
