California’s Inheritance Tax Break Is Helping Some Much More Than Others

An inheritance tax benefit, along with Proposition 13, has resulted in lower tax rates passing down through generations and billions of dollars in lost tax revenue.

2 minute read

August 30, 2018, 8:00 AM PDT

By Camille Fink


Southern California Coast

Creative Family / Shutterstock

For long-term homeowners, Proposition 13 has kept property taxes low and tied to property values from the 1970s. Liam Dillon and Ben Poston report on a Los Angeles Times analysis of the effects of an inheritance tax break passed in 1986, eight years after Proposition 13. For over 30 years, Proposition 58 has allowed parents to pass on these tax benefits to their children, generation after generation.

The study of 13 coastal communities found that these inherited houses are located in areas with higher property values. In addition, many of the properties in vacation spots and wealthier parts of Los Angeles County are rentals or used as second homes. The consequences, say Dillon and Poston, have been twofold:

The inheritance tax break, The Times has found, has allowed hundreds of thousands — including celebrities, politicians, out-of-state professionals and some of California’s most prominent families — to avoid paying the higher taxes owed by newer homeowners. The tax break has deprived school districts, cities and counties of billions of dollars in revenue.

Policymakers and advocates acknowledge the inheritance tax break was enacted in the state’s anti-tax political environment of the 1970s and its unanticipated effects are creating a tiered system. However, the robust support for Proposition 13 and failed past attempts to change it mean any reform efforts around the inheritance tax break face an uphill battle.

Friday, August 17, 2018 in Los Angeles Times

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 9, 2025 - Diana Ionescu

Map of Haussmann's redesign of Paris in the 1850s through 1870s under Napoleon III.

In Urban Planning, AI Prompting Could be the New Design Thinking

Creativity has long been key to great urban design. What if we see AI as our new creative partner?

June 30, 2025 - Tom Sanchez

View of dense apartment buildings on Seattle waterfront with high-rise buildings in background.

King County Supportive Housing Program Offers Hope for Unhoused Residents

The county is taking a ‘Housing First’ approach that prioritizes getting people into housing, then offering wraparound supportive services.

July 11 - Real Change

Aerial view of suburban housing near Las Vegas, Nevada.

Researchers Use AI to Get Clearer Picture of US Housing

Analysts are using artificial intelligence to supercharge their research by allowing them to comb through data faster. Though these AI tools can be error prone, they save time and housing researchers are optimistic about the future.

July 11 - Shelterforce Magazine

Green bike share bikes parked in a row on a commercial street with outdoor dining and greenery.

Making Shared Micromobility More Inclusive

Cities and shared mobility system operators can do more to include people with disabilities in planning and operations, per a new report.

July 11 - Cities Today