What did Prop 19 change for parent-child home transfers?
Prop 19 narrowed a long-standing break. Before February 16, 2021, a parent could pass a low property tax base to a child on a home with no value limit, plus other real estate up to a lifetime cap. Now the break covers a family home or family farm, and it has a value limit.
California voters approved Prop 19 on November 3, 2020. The State Board of Equalization (BOE) publishes the rules. This post summarizes them in general terms. It is not legal or tax advice. Ask your own attorney or your county assessor about your home.
Here is the change in plain terms, based on the BOE comparison chart:
| Item | Former law (Props 58 and 193) | Prop 19 (transfers on or after Feb. 16, 2021) |
|---|---|---|
| Which homes | Principal residence of the parent | Principal residence of the parent that becomes the principal residence of the child, or a family farm |
| Value limit | No value limit on the home | Current taxable value plus $1,000,000 (as biennially adjusted) |
| Other real estate | Lifetime limit of $1,000,000 of factored base year value | Exclusion eliminated for other real property |
| Claim deadline | Within 3 years or before transfer to a third party | Within 3 years or before transfer to a third party |
The key point for most families: the home must become the child’s own home. A child who inherits and rents it out, or keeps it as a second property, loses the break.
Does the child have to live in the home?
Yes. At least one eligible child must live in the home as a family home. The BOE says that person must “continually live in the property” for the exclusion to last. If you gift a home to two children, only one must live there. That child applies for the homeowners’ or disabled veterans’ exemption within one year of the transfer.
If the home stops being anyone’s principal residence, the break ends. The home then gets a new taxable value as of the next lien date. The BOE says that value is the market value on the date of the transfer, adjusted each year for the inflation factor.
For Bay Area families, this matters a lot. A home bought decades ago may carry a very low taxable value compared with today’s market. Losing that base can raise the yearly property tax by a large amount. Learn the rules before you decide who gets the house.
How does the $1 million value limit work?
The break covers the old taxable value plus $1 million. If the home is worth more than that, the excess is added to the taxable value. The child still gets the exclusion on the rest.
The BOE gives this example:
| Step | Amount |
|---|---|
| Factored base year value (the old taxable value) | $300,000 |
| Fair market value at transfer | $1,500,000 |
| Excluded amount ($300,000 + $1,000,000) | $1,300,000 |
| Excess added to taxable value ($1,500,000 - $1,300,000) | $200,000 |
| New taxable value ($300,000 + $200,000) | $500,000 |
The $1 million adjusts every two years. The BOE lists $1,044,586 for transfers from February 16, 2025 through February 15, 2027. The amount will change again, so check the BOE page for the current figure.
A Bay Area home can be worth far more than $1.3 million. The gap between the market value and the limit is where the new tax comes from. That gap is also where planning questions begin.
What if the home is a rental?
The BOE answers this one directly. A rental home passed from parent to child does not qualify for the exclusion. The same goes for second homes and other real estate that is not the parent’s principal residence.
Families sometimes forget this. They plan around one low-tax home and a rental property, then learn only one was ever protected, or neither. List every property and ask how each one is treated before you finalize any plan.
When do you have to file the claim?
The BOE lists a deadline of three years from the date of transfer or death, or before a transfer to a third party, whichever is earlier. The claim form is BOE-19-P. File it with the county assessor.
A late claim can cost real money. Put the date on your calendar when a parent passes or a gift is made. An attorney or your county assessor can confirm the deadline for your case.
What should you ask before you transfer or inherit a home?
Prop 19 does not pick the right plan for you. It changes the cost of each choice. These questions help you start:
- Is the home the parent’s principal residence today?
- Will a child live in it as a family home, and for how long?
- What is the home’s current taxable value, and what is its market value?
- What other property will the family hold, and how does Prop 19 treat it?
- How does a gift now compare with an inheritance later? Ask about step-up in basis, which resets the cost basis for income tax when an heir inherits.
- Does the estate plan treat all children fairly if one child gets the home?
Prop 19 is a property tax rule. The federal income tax effect of a gift or inheritance is separate. Your CPA and attorney should look at both. Read more in our guide to Prop 19 and the glossary entry for Proposition 19.
Many families also want to pass on more than property. Proverbs 13:22 speaks of leaving an inheritance to the next generation. A home often carries memories, and it can also cause conflict if the plan is unclear. A revocable living trust can state your wishes in writing, and a conversation with your children can explain why. Our California estate planning checklist lists the other documents to review.
Next step
Seek First’s Trust & Estate Planning service includes an estate planning attorney on the team. To talk through your home and your family’s plan, book a free 20-minute call at /contact or call (866) 398-4044. See also how we serve families.
Frequently asked questions
Does Prop 19 apply when I inherit a home in California?
It can. Prop 19 sets the rules for passing a parent's low property tax base to a child. The home must be the parent's principal residence and become the child's principal residence. If it does not, the county generally reassesses the home at its current market value. Ask your attorney or county assessor about your case.
Can a child inherit a rental home under Prop 19?
Not with the exclusion. The Board of Equalization says Prop 19 limits the parent-child exclusion to a family home or a family farm. A rental home passed from parent to child does not qualify. The child may owe property tax on the home's current market value after the transfer.
How long do I have to file a Prop 19 claim?
The Board of Equalization lists a deadline of three years from the date of transfer, or before a transfer to a third party, whichever comes first. Form BOE-19-P is the claim form. Do not wait. Ask the county assessor or your attorney to confirm the deadline for your transfer.
What happens if the child moves out of the inherited home?
The exclusion ends. The BOE says at least one eligible transferee must continually live in the property as a family home. Once nobody does, the home gets a new taxable value as of the next lien date. That value is based on the market value when it was inherited, adjusted for inflation.
Terms on this page
Sources
- California State Board of Equalization: Proposition 19
- California State Board of Equalization: Proposition 19 comparison chart
- California State Board of Equalization: Proposition 19 rental home answer
- California State Board of Equalization: Proposition 19 value limit example
- California State Board of Equalization: Proposition 19 filing period
- California State Board of Equalization: Proposition 19 adjusted amount
Written by Seek First and checked against the sources above on November 10, 2026. Tax limits, ages and laws change. This page is general education, not tax, legal or investment advice. Please consult legal or tax professionals about your own situation. Investing involves risk of loss.
