The new Proposition 19 will let you keep your old tax assessment as the basis for your property taxes only if your child (the new owner) resides there. So yes, to keep that nice low Prop 13 assessment value on property that your children will not live in, you should transfer any property before February 15th when the new law takes effect.
There is no advantage to transferring property before February 15th unless your children plan to keep the property, and it only matters for property the children will not make their primary residence.
However, there is another question to be asked. What advantage am giving up on the federal capital gains tax if I gift the property away?
The big advantage of inheritance over gifting is that the federal tax basis changes in your heir's favor upon the transfer. If I gift you my house, then I am also gifting you my tax basis. If you inherit the house from me after my untimely demise then your tax basis is the current value. This is called the stepped up basis. If the property has gone up in value since I bought it, then you are dodging a huge tax bill by getting the stepped up basis.
Let's look at an example. If you give someone an asset, you also give them your tax basis (which is a bad thing). If Mom and Dad paid $100,000 for their house many years ago and now it is worth $1 Million, then there is a $900,000 gain waiting to be taxed when they sell (at maybe 20%). If they give you the house, they also give you the $100,000 tax basis (their purchase price) and when you sell the house YOU will have to pay the tax on the $900,000 gain.
What is better is to pass the house through inheritance (a Will or Trust). If I pass my house to you after my sad and untimely death, then your tax basis is NOT my tax basis. Your tax basis is "stepped up" to the current value ($1 million in our example) so that no one ever pays tax on that $900,000 gain (which is a good thing for you; the government would probably just blow the money on something stupid).
Also, for older folks here in California, giving away a house will make them ineligible for Medi-Cal to pay their nursing home costs for the next 30 months. If they instead keep the house as their residence (even if they are in a nursing home) and put it in a Trust (any kind) then the house will also be protected from Medi-Cal using that house to get paid back for what Medi-Cal spent on them.
So under what circumstances would you want to transfer property now? Only if you have no significant taxable gain on the property such that the property tax savings outweigh the capital gains burden.
To make a wise decision, we have to do the math.
Let's look at Mom and Dad again who bought their home for $100,000 but now it is worth $1 million. They probably pay about $1,500 per year in property taxes. If they pass that house to their children before February15th, then the children will keep that low tax rate for as long as they own the house. If they wait until after February15th then their property taxes will go up by about $10,000 per year (assuming the children do not use it as their residence). If the children have no intention to keep the property then you shouldn't be worrying about their property taxes anyway.
But what have we done to their federal taxes? When the house is eventually sold, the owner will have to pay capital gains taxes on the profit; the profit is calculated on the tax basis. For Mom and Dad, that tax basis is the amount they paid for the house ($100,000 in our example). If they give you that house then they also give you the tax basis of $100,000. When you sell it some day, you will owe taxes on a $900,000 gain at about a 20% tax rate. If you inherit from Mom and Dad then you get a shiny, new stepped up tax basis of the current value - so no one ever pays taxes on that $900,000 gain!
So do you want to give the property to your children so they can have lower property taxes? Probably not, compare the tax costs using these rough figures:
Federal tax cost of gifting = (property value) minus (your tax basis) times (0.2)
Property tax saving by gifting it now = (0.0125) times (change in assessment value) times (number of years the kids will keep it)
You might want to adjust the property tax cost if this property is kept as a rental, adjusting the property tax cost down by one-quarter as it is a taxable business expense.
Back to Mom and Dad, if they gift you the house (again, you do not use it as a residence), then you will have to keep the house for about 20 years before you see any net savings. You might later make the property your residence for a few years so that you can sell and use the federal tax exclusion (up to $500,000) and that would lower your break even point to about 8 years.
Of course, every situation is different and any large gift should be discussed with an estate planner who understands your goals and needs.