Key Takeaways
- Proposition 19 (2020) allows homeowners 55+ to transfer their tax base to a replacement home anywhere in California
- Transfers are allowed up to 3 times (previously once) and the replacement home can be of equal or greater value
- Parent-child exclusions were significantly limited—inherited property must be used as primary residence
- If inherited home is not primary residence, it will be reassessed to market value
- Deadline to claim parent-child exclusion is 1 year from date of transfer
Proposition 19: Property Tax Transfers
Proposition 19, passed by California voters in November 2020, made significant changes to property tax transfer rules. It expanded benefits for certain homeowners while limiting others.
Two Major Changes
1. Expanded Base Year Value Transfers (Effective April 1, 2021)
Homeowners age 55 or older, those with severe disabilities, or victims of wildfires/natural disasters can now:
| Before Prop 19 | After Prop 19 |
|---|---|
| Transfer once | Transfer up to 3 times |
| Same county only (or limited counties) | Anywhere in California |
| Equal or lesser value replacement | Equal or greater value (with adjustment) |
2. Limited Parent-Child Exclusions (Effective February 16, 2021)
Inherited properties face new restrictions:
| Before Prop 19 | After Prop 19 |
|---|---|
| Children inherit Prop 13 base | Must use as primary residence |
| No restrictions on use | Non-primary residence = reassessment |
| Unlimited value | $1 million exclusion cap adjustment |
Base Year Value Transfers (Age 55+)
Who Qualifies
- Homeowners age 55 or older
- Persons with severe disabilities
- Victims of wildfires or natural disasters
Key Benefits
- Anywhere in California - Not limited to same county
- Up to 3 times - Previously limited to once
- Greater value allowed - With adjusted assessment
Value Adjustments
| Replacement Home Value | Result |
|---|---|
| Equal or less than original | Full base year value transfer |
| Greater than original | Base value + difference |
Example: Original home base value $300,000, sells for $700,000. Buys replacement for $900,000.
- Base value: $300,000
- Excess: $900,000 - $700,000 = $200,000
- New base: $300,000 + $200,000 = $500,000
Filing Requirements
Must file Claim for Reassessment Exclusion:
- Within 3 years of purchase/transfer
- Form BOE-19-P (for persons 55+/disabled)
- Form BOE-19-D (for disaster victims)
Parent-Child Exclusions (Limited)
Proposition 19 significantly changed how inherited properties are taxed.
Before February 16, 2021
- Children could inherit parents' Proposition 13 base value
- Applied to principal residence AND other property
- No requirement to live in the property
- Unlimited value exclusion
After February 16, 2021
| Property Type | Exclusion Available? |
|---|---|
| Family home, child uses as primary residence | Yes (with cap) |
| Family home, child does NOT use as primary residence | No - reassessed |
| Family farm | Yes (if child continues farming) |
| Other real property | No - reassessed |
The $1 Million Adjustment Cap
For properties that qualify for the exclusion:
- Base value PLUS $1 million is protected
- Any excess is added to assessed value
Example: Parent's home has $200,000 base value, $1,500,000 market value.
- Protected: $200,000 + $1,000,000 = $1,200,000
- Excess: $1,500,000 - $1,200,000 = $300,000
- New base: $200,000 + $300,000 = $500,000
Filing Deadline
Claims must be filed within 1 year of the date of transfer (death, gift, etc.).
Grandparent-Grandchild Transfers
Proposition 19 allows grandparent-grandchild transfers if:
- All parents of the grandchild are deceased
- Same rules as parent-child transfers apply
Impact on Real Estate Practice
Real estate professionals should:
- Educate clients about Proposition 19 implications
- Advise inherited property recipients to consult tax professionals
- Understand timeline - February 16, 2021 is the key date
- Know the filing deadlines for claiming exclusions
- Explain primary residence requirements for parent-child exclusions
Comparison: Before and After Proposition 19
| Feature | Before Prop 19 | After Prop 19 |
|---|---|---|
| 55+ transfer limit | Once | Up to 3 times |
| 55+ location | Same/participating county | Anywhere in CA |
| Parent-child exclusion | Automatic | Primary residence only |
| Inherited property (not primary) | Base value transfers | Reassessed to market |
| Filing required | Yes | Yes (stricter deadlines) |
Under Proposition 19, homeowners age 55 or older can transfer their base year value:
Under Proposition 19, when a child inherits their parent's home but does NOT use it as a primary residence:
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