Does an inherited rental property keep my parent's property tax base under Prop 19?

The arithmetic is brutal on long-held Bay Area rentals, and you should do it before you decide what to keep. A duplex carrying an assessed value of $250,000 and a market value of $1,800,000 goes from roughly $2,500 a year in property tax to something on the order of $18,000, and that new expense lands on the rent roll immediately. Families who inherit several properties frequently discover that the combined increase changes which buildings are worth keeping and which should be sold. The picture is not quite as bleak as that sounds. The reassessment is a property tax event only; for federal income tax you still receive a stepped-up basis in the property at your parent's date-of-death value, so selling soon after death usually produces little or no capital gain, and a sale is a real option rather than a last resort. Planning done during your parent's lifetime also changes the outcome materially: how title is held, whether an entity makes sense, and which property is designated as the residence are all decisions with property tax consequences. All of them have to be made while your parent is alive, which is the part families learn too late.