This falls under Proposition 19, and the wrinkle in your scenario is big enough that the county assessor should rule on it before you act. In broad terms, Prop 19 lets eligible California homeowners, including those 55 and older, transfer the taxable base of their primary residence to a replacement primary residence, within value limits and within a set time window around the purchase. The nuance in your case: the benefit is built around buying or moving into a replacement primary home and carrying the base over from the home you are leaving as your primary. Shifting your base between two properties you already own, where one has been a rental, is not clearly the same thing, and the eligibility, timing, and value rules are specific. The rules also changed meaningfully when Prop 19 replaced the older Propositions 60 and 90, so older guidance you find can be out of date. Rather than guess, take your exact facts (which home is currently your primary, the values involved, and the dates) to the county assessor's office or a CPA who knows Prop 19. They can tell you whether a base transfer is available in your case and what steps preserve it, because getting the sequence wrong can forfeit the benefit.