Prop 19 and passing on a California home: what parents and adult children need to know

What is Prop 19, and why does it matter to a family home?

Prop 19 is a 2020 California ballot measure that changed how property tax works when a home passes from parent to child. It narrowed the old exclusion, so many children now face a higher bill. It also widened a separate break for older homeowners who move.

The Board of Equalization (BOE) says: “On November 3, 2020, California voters approved Proposition 19, The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.”

Why does it matter? Many California homes carry a low property tax base that has grown slowly for decades. A new owner can face a much higher bill if the base resets to current market value. Prop 19 decides when that happens.

This guide is general education, not legal or tax advice. The BOE itself says: “It is highly encouraged that you consult an attorney for advice specific to your situation.” Take your facts to a California estate planning attorney before you sign a deed or change a trust. Our overview of trust and estate planning shows how the pieces fit together.

What changed for parent-child transfers?

Before Prop 19, a child could keep a parent’s property tax base on any home, with no value limit. Now the home must be the parent’s principal residence and become the child’s, and a value limit applies. Rental and other property no longer qualifies.

Source: BOE comparison charts. The BOE also notes that Prop 19 is not retroactive: “Proposition 19 is not retroactive and transfers that have already occurred under the benefit of Proposition 58 will not now be subject to reassessment.”

What counts as a family home?

A family home is the parent’s principal residence that becomes the child’s principal residence. A family farm also qualifies. A rental home, a vacation home or any other real property does not.

The BOE states: “Proposition 19 limits the parent-child transfer exclusion to a transfer of (1) a family home that is the principal residence of the transferor and becomes the principal residence of the transferee, or (2) a family farm.” It adds that “the transfer of a rental home between parents and children would not qualify for the exclusion.”

Three practical points follow.

• The parent must have lived there. The home must have been the transferor’s principal residence.
• The child must move in. The BOE says that if a home goes to two children, only one needs to live there and apply for the exemption within one year.
• Grandparents and grandchildren. The BOE lists a special rule for these transfers: the grandchild’s parent must be deceased on the date of transfer.

Many families own more than one property. The BOE says Prop 19 eliminates the old exclusion for other real property, so a parent’s second home or rental no longer gets it. Ask your attorney how each property would be treated.

How does the value limit work?

The home keeps its low base only up to a cap. The cap is the home’s factored base year value plus an adjusted $1 million. Value above the cap gets added to the taxable value. The BOE adjusts the $1 million every two years.

Here are the BOE’s published amounts.

The latest range on the BOE page ends February 15, 2027. For a later transfer, check the BOE page for the current figure.

The BOE explains the rule this way: “The value limit under Proposition 19 is the sum of the factored base year value plus $1 million. If the market value exceeds this limit, the amount exceeding the value limit will be added to the factored base year value.”

The BOE gives its own example, which uses the original $1 million: “For example, a family home has a factored base year value (FBYV) of $300,000 and a fair market value of $1,500,000.” The excluded amount is $1,300,000. The extra $200,000 is added to the base, so the adjusted base year value is $500,000.

Notice what this means. A Bay Area home worth far more than the cap will have its taxable value reset in part, even when the child qualifies. Your county assessor sets the exact figures for your property.

What must the child do to keep the exclusion?

The child must live in the home as a principal residence and file on time. If the child moves out, rents it out or sells, the county assigns a new taxable value. A late homeowners’ exemption claim means the exclusion applies only going forward.

The BOE says: “At least one eligible transferee must continually live in the property as their family home for the property to maintain the exclusion.” Once the home is no longer a principal residence, “it will receive a new taxable value as of the lien date following the date you no longer occupy the property as your principal residence.”

Deadlines in the BOE filing checklist:

1. Homeowners’ exemption (form BOE-266) or disabled veterans’ exemption (BOE-261-G): within 1 year from the date of death or transfer.
2. Exclusion claim (form BOE-19-P for parent-child): within 3 years from the date of death or transfer, or before a transfer to a third party, whichever is earlier.

The BOE warns: “Exclusion will be applied prospectively if filed after 1-year period.” File with the County Assessor where the home sits. Put both dates on a calendar the day the transfer happens.

Does a trust change the result?

No. A revocable trust helps your family avoid probate, but it does not protect the property tax base. When the trust becomes irrevocable, a change in ownership occurs, and the same Prop 19 rules apply.

The BOE says that for property in a trust, a change in ownership occurs when any interests vest in persons other than the trustor or the trustor’s spouse or registered domestic partner when a revocable trust becomes irrevocable. Then: “This typically occurs upon the death of the trustor.”

A trust still has real jobs: privacy, probate, and clear instructions for how to share a home among several children. See our glossary entry on a revocable living trust and our compare page on revocable and irrevocable trusts.

What does Prop 19 allow for homeowners 55 and older?

It lets certain homeowners carry their low property tax base to a replacement home anywhere in California. You may qualify if you are 55 or older, severely and permanently disabled, or a victim of wildfire or a natural disaster. You may use it up to three times.

Key rules from the BOE:

• Timing. Buy or build the replacement home within two years of selling the original.
• Location. Anywhere in California.
• Value. The base transfers without adjustment if the replacement is of equal or lesser value, which the BOE defines as 100%, 105% or 110% of the original, depending on when you buy.
• Number of uses. “Under Proposition 19, three transfers will be allowed for homeowners who are over age 55 or physically and permanently disabled.”
• Claim. You file after both transactions are done and you live in the replacement home. It is not done through escrow.

If the replacement costs more, the excess is added to the transferred base. This rule matters for couples who want to downsize near children or move closer to family.

How do taxes on the home work apart from property tax?

They are a separate question. Property tax reassessment is one issue. Income tax on a later sale and federal estate or gift rules are others. Each needs its own answer from your CPA or attorney.

Our glossary entry on step-up in basis explains one idea that often comes up when a home passes at death. Our entry on Proposition 19 gives a short definition. For the wider picture, see the California estate planning checklist. For a shorter read on this topic, try our post on Prop 19 and parent-child transfers.

What should you ask your attorney before you decide?

Ask how Prop 19 applies to each property you own and each child you name. Bring a list of your properties, their purchase dates and your children’s housing plans. Then use the questions below.

The last two questions are not only legal. They are family questions. Our guide on preparing heirs and legacy conversations can help you talk through them before a deed is signed.

Next step

Seek First lists Trust & Estate Planning among its services, with an estate planning attorney on the team. If a family home is part of your plan, start with trust and estate planning, then schedule a free 20-minute call or phone (866) 398-4044.