Understanding Proposition 19-Property Tax Reassessment and the Parent-Child Transfer Exclusion

By Mary Korkodian
Trust & Real Estate Attorney

Property Tax Reassessment and the Parent-Child Transfer Exclusion

On February 16, 2021, Proposition 19 went into effect, which limited the property tax reassessment exclusion to the current assessed value plus $1,000,000. Moreover, under Proposition 19, in order for the property to qualify for the reassessment exclusion, the property must be the principal residence of the transferor (generally, the parent) and the transferee (generally, the child). The transferee residing in the property must claim the property as his/her principal residence within one (1) year from the date of the transfer (generally, by filing a Homeowner’s Exemption Form). 

If there is more than one transferee (such as when there are multiple children who are gifted or inherit the subject property), only one of the children is required to reside in the property to be eligible for the parent-child reassessment exclusion.  (See California State Board of Equalization, Frequently Asked Questions (https://www.boe.ca.gov/prop19/#FAQs), Parent-Child and Grandparent-Grandchild Transfers No. 2: “Both children do not need to reside in the residence in order to be eligible to receive the parent-child transfer exclusion under the provisions of Proposition 19. As long as at least one of the children who were gifted the family home resides in the residence and applies for either the homeowners’ or disabled veterans’ exemption within one year of the transfer, and all other requirements have been met, then the parent-child (intergenerational) transfer exclusion should be allowed.”)

The State Board of Equalization has now twice adjusted the $1M exclusion to account for inflation.  Thus, the exclusion amount will depend on when the transfer occurred.

For transfers occurring between February 16, 2021 – February 15, 2023, the property tax exclusion amount is capped at the property’s factored base year plus $1,000,000.  

For transfers occurring between February 16, 2023 – February 15, 2025, the property tax exclusion amount is capped at the property’s factored base year plus $1,022,600.  

For transfers occurring between February 16, 2025 – February 15, 2027, the property tax exclusion amount is capped at the property’s factored base year plus $1,044,586.  

For additional information regarding the adjustment of the $1M amount, click here:  https://aws.boe.ca.gov/proptaxes/pdf/lta25009.pdf

Please Note: This document does not constitute legal advice. Please consult an attorney for legal advice on what to do in a particular situation.