Proposition 19 reshaped California property tax rules in two directions at once: it narrowed the tax break for inherited property so that only a child who actually moves into the family home keeps the parent’s low assessed value, and it broadened the ability of homeowners aged 55 and older, severely disabled homeowners, and disaster victims to carry that low tax base to a new home anywhere in the state. Voters approved the measure in November 2020. The inheritance restrictions took effect February 16, 2021, and the expanded portability rules on April 1, 2021.
What Changed for Inherited Property
Before Prop 19, a parent could pass a primary residence of any value to a child without triggering reassessment, plus up to $1 million in factored base year value of other real property. Rental homes, commercial buildings, and vacation properties all qualified, and no one had to live in them. Children inherited the parents’ decades-old tax base and kept it indefinitely.
Prop 19 eliminated that broader exclusion. The only real property that can now pass from parent to child without a full reassessment is a “family home” the child uses as a principal residence, or a qualifying family farm. Anything else — an inherited rental, a beach cabin, an investment condo — gets reassessed to current fair market value, which in most of California means a steep jump in the annual tax bill.
One detail trips up families repeatedly. The home must have been the parent’s principal residence at the time of transfer. If parents lived in Sacramento and also owned a Tahoe cabin, only the Sacramento home can qualify for the exclusion, and only if the child actually makes it their own primary residence. The Tahoe cabin gets reassessed no matter who moves in.
Requirements to Keep a Parent’s Low Tax Base
Two conditions have to be met. Miss either one and the property is reassessed at market value.
Move In and File Within One Year
The child has to claim the inherited home as their principal residence and file for the homeowners’ exemption or disabled veterans’ exemption within one year of the transfer date. The exemption filing is not a formality; it is how the county assessor confirms occupancy. File late and the exclusion is lost for the period before filing. The claim form is BOE-19-P (Claim for Reassessment Exclusion for Transfer Between Parent and Child), filed with the assessor in the county where the property sits.
The Value Cap
Even a child who moves in cannot shield unlimited value. The exclusion protects the parent’s factored base year value only up to that base year value plus an inflation-adjusted amount. For transfers between February 16, 2025, and February 15, 2027, that amount is $1,044,586. If the current market value exceeds the base year value by more than the cap, the excess is added to the new assessed value.
An example: a parent’s home has a factored base year value of $200,000 and a current market value of $1,500,000. The gap is $1,300,000. Because that exceeds the $1,044,586 cap, the $255,414 difference is added to the $200,000 base, producing a new assessed value of about $455,414 rather than $200,000 or $1,500,000. The cap adjusts every two years. It began at $1,000,000 for transfers through February 15, 2023, rose to $1,022,600 through February 15, 2025, and now stands at $1,044,586.
Losing the Exclusion Later
Claiming the exclusion is not a one-time event. The low base survives only as long as the child continues to occupy the home as a principal residence. Move out and convert it to a rental, or leave it vacant, and the assessor will reassess it to the fair market value as of the inheritance date, adjusted annually for inflation. The new value takes effect on the next lien date after the child stops occupying the property. Families who plan to rent the home for a few years and move back in later should understand that the exclusion does not pause. Once lost, the higher assessed value stays.
Grandparent-to-Grandchild and Family Farm Transfers
The exclusion extends to grandparents transferring to grandchildren, but only when all of the grandchild’s parents who would have qualified as the grandparent’s children are deceased on the date of transfer. If even one qualifying parent is still alive, the grandchild cannot use it. The principal-residence and value-cap rules still apply.
Family farms have their own version of the exclusion with one key difference: there is no requirement that the farm include a home the child lives in. The farm qualifies as long as it remains under cultivation, is used for pasture or grazing, or produces an agricultural commodity as defined by Government Code Section 51201. The same value cap applies to each legal parcel. Letting the land go idle or converting it to non-agricultural use triggers reassessment.
Trusts and LLCs
Most California families hold real estate in a revocable living trust, and moving property into or out of a revocable trust generally does not count as a change in ownership while the trustor keeps the power to revoke. When property passes from the trust to a child at the trustor’s death, the parent-child exclusion still applies, provided the child files a timely BOE-19-P and meets the other requirements.
Irrevocable trusts are harder. A transfer into an irrevocable trust is treated as a change in ownership unless the trustor stays the sole present beneficiary. When the trustor dies and the trust distributes property to a child, the exclusion can still work, but only if the child satisfies every Prop 19 requirement. A trustee’s “sprinkle power” to distribute among multiple beneficiaries creates a change in ownership unless every potential beneficiary independently qualifies for an exclusion.
Property held inside an LLC follows different rules altogether. A transfer of LLC membership interests can trigger reassessment of the real estate if it produces a change of control (more than 50% of ownership shifting) or a cumulative change of more than 50% of interests. The Prop 19 parent-child exclusion applies to direct transfers of real property, so families using entities may need to restructure before a transfer rather than after.
New Portability Rules for Seniors, Disabled Homeowners, and Disaster Victims
The other half of Prop 19 expanded who can take a low tax base to a new home. The prior rules generally kept qualifying homeowners within the same county, unless the destination county opted in, and allowed the transfer only once in a lifetime.
Prop 19 removed both limits. Eligible homeowners can now transfer their base year value to a replacement home anywhere in California, and they can do it up to three times. Wildfire and governor-declared disaster victims face no cap on the number of transfers. A homeowner needs to meet just one of the three qualifications on the date the original property is sold: age 55 or older, severely disabled, or a disaster victim. Homeowners who already used their one transfer under the old Propositions 60, 90, or 110 still get a fresh set of three under Prop 19.
Calculating the New Tax Base on a Replacement Home
The math depends on whether the replacement costs more or less than the sale price of the original.
Replacement of equal or lesser value: the original property’s factored base year value simply moves to the new home. What counts as “equal or lesser” depends on when the replacement is acquired. Bought or built before the original sale, the replacement qualifies if its value does not exceed 100 percent of the original’s full cash value. Within the first year after the sale, the threshold is 105 percent. Within the second year, 110 percent. Those buffers absorb normal market appreciation during the move.
Replacement above those thresholds: the tax base is adjusted upward, but the homeowner still benefits. The new assessed value equals the transferred base year value plus the difference between the replacement home’s full cash value and the applicable threshold. Consider a homeowner with a $150,000 base year value selling for $600,000 and buying an $800,000 replacement within the first year. The 105% threshold is $630,000. The excess is $170,000. The new base is $150,000 plus $170,000, or $320,000 — well below the $800,000 market value.
Multi-unit buildings and ADUs deserve a quick flag. Each unit of a multi-unit replacement is generally treated as a separate primary residence, so only one unit receives the transferred base year value. A single-family home with an accessory dwelling unit is not treated as multi-unit, provided the ADU is not separately titled and the homeowner lives in one of the structures.
How to File
The claim form for portability depends on the qualification:
- Age 55 or older: BOE-19-B.
- Severely disabled: BOE-19-D, plus BOE-19-DC (Certificate of Disability).
- Wildfire or disaster victim: BOE-19-V.
All forms go to the county assessor where the replacement property is located, not where the original home was. The replacement must be purchased or newly constructed within two years of the sale of the original, either before or after. The claim itself must be filed within three years of the purchase or completion of construction to receive the full benefit retroactively. File after that window and relief only applies going forward from the assessment year of filing. Both the original and replacement properties must have qualified for the homeowners’ or disabled veterans’ exemption at the time of their respective transactions.
Inheritance claims use BOE-19-P, filed with the assessor of the county where the inherited property sits, within one year of the transfer date, along with a homeowners’ or disabled veterans’ exemption claim.
A Federal Tax Trap to Watch
Prop 19 is a California property tax measure, but the transfer decision has a federal side. Inherited property receives a step-up in cost basis to its fair market value on the date of the owner’s death. A child who inherits a home worth $1.2 million and later sells it owes capital gains tax only on appreciation above that $1.2 million figure, even if the parent originally paid $200,000.
Lifetime gifts do not get the step-up. Gift the same home before death and the child takes the parent’s original basis. Selling that $1.2 million home after a lifetime gift produces a taxable gain measured from $200,000. Some families consider gifting property to start the one-year occupancy clock early, but the capital gains cost of that move can easily outweigh the property tax savings.
A lifetime gift of real estate also triggers federal gift tax reporting. If the value exceeds the annual gift tax exclusion ($19,000 per recipient for 2025 and 2026), the donor must file IRS Form 709. Gift tax is usually not owed thanks to the lifetime exemption, but the filing itself is required.