In the late 1950s, married actors Lloyd and Dorothy Bridges purchased a beachfront home along the Pacific Coast Highway. The exact purchase price is unknown, but at the time comparable homes in Malibu were selling for $40.00-$50,000. Let’s say they paid $50,000. That’s the same as about $550,000 today. Lloyd died in 1998. Dorothy died in 2009.
After Dorothy’s death, the house passed to her three sons, Jeff Bridges, Beau Bridges, and daughter Lucinda. When the brothers inherited the four-bedroom house, it was worth many millions.
Dividing a house is very difficult. Who gets Christmas? Whose turn is summer? Can children and grandchildren use it when they request it? Jeff and Beau are billionaires in their own right, thanks to their successful acting careers. It’s clear they don’t need the money. I don’t know anything about Lucinda. Maybe she is also very rich, but let’s say she is not. The simple solution in many examples like this is for neither sibling to use the property and instead completely convert it into an income-producing property.
That’s the route the Bridges brothers chose. For years, they rented the beachfront house for $16,000 in the off-season months and $25,000 in the summer months. Conservatively, this would have generated $200,000 in revenue annually. Split three ways, that would equate to about $67,000 per sibling. Not bad considering they didn’t have to lift a finger to do it!
The house had no mortgage and presumably would have required very little in terms of ongoing maintenance. By far the biggest cost to the brothers would have been the annual property tax. But here’s the kicker: Thanks to a somewhat controversial California tax rule, his property tax bill remained stable. $5,700. Not $5,700 per month. $5,700 per year. In other words, the entire annual tax burden could be covered with approximately 11 days rental.
California tax codes
The reason dates back to California’s Proposition 13, which caps property taxes at 1% of assessed value and limits annual increases in that assessed value to 2% unless the property changes hands.
In 1986, voters approved California Proposition 58, which allowed parents to transfer primary residence to their children without triggering reassessment. In many cases, that meant heirs could continue paying property taxes based on valuations established decades earlier.
Consider this hypothetical example: Say your grandparents bought an undeveloped two-acre property along Lake Tahoe for a penny in the 1940s. They built a cabin, then a main house, then another small house to create a nice little family compound that became the emotional center of their extended family, hosting weddings, reunions, and more. Now, let’s say the state assesses the value of this Tahoe property at $30 million based on recent comparable sales when you, your two siblings, and three cousins inherit it. You, your two brothers, and your three cousins would have to collectively earn $600,000 before taxes each year to pay that bill. That’s $100,000 per person. What if Cousin Timmy from Florida can’t hold down a job, much less put up $100,000 a year for a house in Tahoe he never visits? It gets complicated and complicated quickly. The 1986 law (Proposition 58) was passed specifically to prevent families from being forced to abandon property they have owned for generations.
Critics see something else.
They see a system in which two families living next door to each other can pay radically different tax bills simply because one bought in 1965 and the other in 2025. They see heirs renting multimillion-dollar properties while contributing a fraction of what the new owners pay for schools, police, fire protection, roads and libraries. In Los Angeles County, inherited properties like Bridges’ house became emblematic of what some lawmakers called a “two-tier” tax system.
The reaction eventually led to reform. In 2020, California voters approved California Proposition 19, which significantly reduced the inheritance benefit. Under the new rules, children who inherit a home must use it as their primary residence to retain limited tax benefits. Rental and second homes generally lose the old shield and are revalued at their market value.
It is important to note that Proposition 19 applies prospectively. It does not retroactively reevaluate property already transferred under the previous rules. The Bridges brothers inherited their house in 2009, long before the renovation. Its tax base remained intact.
Charge
Despite the flat tax rate, but possibly due to some unwanted attention after the Bridges brothers became the poster children of the two-tier system, in July 2024, Lloyd, Beau and Lucinda decided it was time to cash out. They listed the house for 9.2 million dollars. Here’s a video walkthrough from when it first went on sale:
They found no buyers, so on January 7, 2025, they put the property back up for sale at a reduced price of $8.85 million. Unfortunately, January 7, 2025 also happened to be the day the Palisades Fire broke out. That fire destroyed the house.
A little over a year later, the authorized package returns to the market for 4.37 million dollars.
What a new owner would face
Let us now consider the calculations for a hypothetical buyer.
Suppose someone buys the burned lot for $4 million.
High-end coastal construction in Malibu can easily cost $2,000 per square foot, especially considering stricter modern building codes, coastal permitting requirements, and fire resistance standards. Rebuilding a 3,000-square-foot home would probably cost around $6 million.
That puts the total investment at approximately $10 million.
Because this would be new construction, not a renovation, the finished home would be reassessed at or near market value. Even assuming a conservative valuation of $10 million, the new owner would face a property tax bill of about $100,000 a year under California’s 1% rule. That’s nearly 18 times what the Bridges brothers were supposedly paying based on their legacy assessment.
On the other hand, if you can afford to pay $10 million to build a house, $100,000 a year is probably about $20 a year for you and me. So maybe everything will work out in the end.