Many Orange County homeowners have decades of equity and a property tax bill based on what they paid long ago. Moving can put both at risk: a purchase normally resets your property taxes to today’s value, and a new mortgage adds a monthly payment in retirement. Two rules change that math. Proposition 19 can carry your tax base with you, and a HECM for Purchase can finance the new home without a required monthly mortgage payment. This guide explains how both work in 2026.
Quick answer
If you are 55 or older, Proposition 19 lets you transfer the taxable value of your current home to a replacement home anywhere in California, up to three times, as long as you buy within two years before or after selling. If the new home costs more than the old one sold for, above 100%, 105% or 110% depending on timing, the difference is added to your taxable value. If you are 62 or older, a HECM for Purchase lets you buy the new home with a reverse mortgage and a large down payment, often half the price or more depending on your age and rates, with no required monthly mortgage payment. You still pay property taxes, insurance, HOA dues and upkeep.
How does Proposition 19 work for homeowners 55 and older?
Under Proposition 13, your property tax is based on your home’s taxable value, which starts at the purchase price and can rise by no more than 2% a year. Buying a new home normally resets that value to the new price. Proposition 19, which took effect for transfers on April 1, 2021, lets eligible owners bring their existing taxable value with them instead.
- Who qualifies: an owner who is 55 or older on the date the original home is sold. Severely disabled owners and victims of wildfire or other declared disasters also qualify.
- Where: anywhere in California. The older rules limited transfers to the same county or a short list of participating counties.
- How often: up to three times per person for owners 55 and older.
- When: the replacement must be bought or newly built within two years before or after the original home is sold.
- Which homes: both must be principal residences. The original must have been eligible for the homeowners’ exemption, and there is no minimum number of years you must have lived there.
The value of the replacement decides whether your tax base carries over unchanged:
| When you buy the replacement | Price that counts as equal or lesser value |
|---|---|
| Before you sell the original | Up to 100% of the original’s sale price |
| Within the first year after the sale | Up to 105% of the original’s sale price |
| In the second year after the sale | Up to 110% of the original’s sale price |
If the replacement costs more than that threshold, the difference is added to your transferred taxable value. For example, say your Huntington Beach home has a taxable value of $300,000 today. You sell it for $1,500,000 and buy a $1,200,000 condo eight months later. Because $1,200,000 is below 105% of $1,500,000, the condo keeps your $300,000 taxable value. If you bought a $1,650,000 home in that first year instead, the threshold would be $1,575,000, and the $75,000 difference would be added, for a taxable value of $375,000.
How do you claim a Prop 19 transfer?
- The form: file the state’s Prop 19 claim for homeowners 55 and older with the assessor in the county where the replacement home is located. For a home in Orange County, that is the Orange County Assessor.
- When to file: after both sales have closed and you have moved in. The claim is not filed through escrow.
- Deadline: within three years of buying the replacement. A late claim still helps, but only going forward from the year you file.
- Buying first: allowed, but the replacement is taxed at its full value until the original sells, and that difference is not refunded.
Planning to sell and buy after 55?
Jon can map the timing, the Prop 19 value test and your financing options before you list.
What is a HECM for Purchase?
A HECM for Purchase is an FHA insured reverse mortgage used to buy a new principal residence. You make a large down payment, usually from the sale of your current home, the reverse mortgage covers the rest, and no monthly principal and interest payment is required as long as you live in the home and meet the loan terms.
- Age: every borrower must be at least 62 at closing. A spouse who is not a borrower can be younger.
- Occupancy: the home must become your principal residence within 60 days of closing.
- Counseling: every borrower must complete counseling with a HUD approved HECM counselor before the loan process begins.
- Loan amount: based on the youngest borrower’s age, current interest rates and the lesser of the price, the appraised value and the 2026 national limit of $1,249,125.
- Down payment sources: cash, the sale of your current home or other assets. Sellers and agents can contribute up to 6% of the price toward costs, but sweat equity, trade equity, rent credits and premium pricing cannot be used.
- Mortgage insurance: 2% of the maximum claim amount (the lesser of the price, the appraised value and the national limit) at closing, plus 0.5% a year on the loan balance.
- Financial assessment: the lender reviews your credit and your history of paying property taxes and insurance, and may set aside part of the loan to pay them.
- Residency: every borrower needs a valid Social Security number and U.S. citizenship or lawful permanent residency.
Here is how the math works, using hypothetical numbers. If the loan amount available for your age and rate is 45% of a $900,000 price, the HECM provides about $405,000 and you bring about $495,000 plus closing costs. The loan balance grows over time instead of shrinking. It is repaid when the last borrower sells, moves out or passes away, usually from the sale of the home, and because the loan is FHA insured, you or your heirs never owe more than the home is worth when it is sold. You must keep paying property taxes, homeowners insurance and any HOA dues and keep the home in good repair, or the loan can become due. An eligible spouse who is not a borrower, who was named at closing and still lives in the home, can generally stay after the borrower’s death.
Should you pay cash, take a regular mortgage or use a HECM for Purchase?
| Option | Monthly mortgage payment | Cash needed at purchase | Best fit |
|---|---|---|---|
| Pay cash | None | The full price plus closing costs | Plenty of liquid funds and a preference for no loan at all |
| Traditional mortgage | Required | A down payment, which can be modest | Steady income and a plan to keep more cash available |
| HECM for Purchase | None required; taxes, insurance, HOA dues and upkeep still apply | A large down payment, often half the price or more | Age 62 or older, wanting to keep some cash and avoid a monthly payment |
Upfront costs on a HECM for Purchase, including mortgage insurance, are usually higher than on a traditional mortgage, and because the balance grows over time, there is typically less equity left for heirs. Compare all three with your financial and tax advisors before you decide. If you plan to stay in your current home instead, our HELOC and cash out refinance pages cover other ways to use your equity.
How are taxes handled when you sell your current home?
If you owned and lived in your home for at least two of the five years before the sale, you can generally exclude up to $250,000 of gain from income, or $500,000 for married couples filing jointly. You generally cannot use the exclusion if you excluded gain on another home within the previous two years. Long time Orange County owners can have gains above those amounts, so talk with your tax professional before you set a sale price and a replacement budget.
What is a step by step plan for downsizing after 55?
- Estimate your sale proceeds. Start with a realistic price, then subtract your loan payoff, selling costs and any expected tax.
- Set a replacement budget. Keep the price within the Prop 19 threshold that fits your timing, or decide how much added taxable value you are comfortable with.
- Start HECM counseling early if you are considering one. The lender cannot begin until your counseling certificate is signed.
- Get preapproved before you list. Knowing your loan amount, whether a HECM or a traditional mortgage, tells you how much cash the move requires.
- Decide whether to sell first or buy first. Selling first gives you certainty on proceeds; buying first means paying full taxes on the new home until the old one sells.
- File your Prop 19 claim. Once both sales have closed and you have moved in, file with the county assessor within three years.
Frequently asked questions
Can you transfer your property tax base to another county in California?
Yes. Under Proposition 19, homeowners 55 and older can transfer their taxable value to a replacement home anywhere in California, as long as it is bought within two years before or after the original home is sold.
How many times can you use Proposition 19?
Up to three times per person for owners 55 and older or severely disabled. Transfers by victims of wildfire or other declared disasters do not count toward the three.
What happens if the new home costs more than the old one?
If the replacement costs more than 100% of the original’s sale price when bought before the sale, 105% within the first year after, or 110% in the second year, the amount above that threshold is added to your transferred taxable value.
How old do you have to be for a HECM for Purchase?
Every borrower must be at least 62 at closing. A spouse who is not a borrower can be younger and, if named at closing and living in the home, can generally stay after the borrower’s death.
Do you make monthly payments on a HECM for Purchase?
No monthly principal and interest payment is required. You must still pay property taxes, homeowners insurance and any HOA dues and maintain the home. The loan is repaid when the last borrower sells, moves out or passes away.
Jon Shrum
President of KMC Financial and leader of Team Shrum, powered by ARBOR Financial Group. Helping Orange County homebuyers and homeowners buy, refinance and plan their next move.
NMLS #335447
Based in Huntington Beach, serving California
Downsizing in Orange County?
Plan the move, the taxes and the financing together.
Jon Shrum and Team Shrum can compare paying cash, a traditional mortgage and a HECM for Purchase on the home you want, and line up the timing with your Prop 19 transfer.
Sources and official resources
- California State Board of Equalization: Proposition 19
- California State Board of Equalization: Prop 19 base year value transfer guidance
- Orange County Assessor: Proposition 19
- California State Board of Equalization: Proposition 13 overview
- HUD: Single Family Housing Policy Handbook 4000.1
- HUD: 2026 HECM maximum claim amount (Mortgagee Letter)
- IRS Topic 701: Sale of your home
Information checked September 27, 2026. Rates, loan limits, program rules and assistance funding change, so confirm current terms before you rely on them.
This article is for general education only and is not a loan offer, commitment to lend, or tax or legal advice. Rates, terms, fees and programs vary by lender and are subject to change without notice. All loans are subject to credit approval, underwriting guidelines and property eligibility. Examples are illustrations, not quotes. Team Shrum, KMC Financial and ARBOR Financial Group are not affiliated with any government agency. Jon Shrum, NMLS #335447. KMC Financial is powered by ARBOR Financial Group. ARBOR Financial Group is a DBA of The Turnkey Foundation Inc., NMLS #236669 (NMLS Consumer Access). Equal Housing Opportunity.
