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February 25, 2021

Interpreting California Proposition 19

Please read important disclosures HERE.

A recent update on California Proposition 19 was published on August 9, 2021 and is available here.

In November 2020, California voters approved Proposition 19, the Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. A constitutional amendment, Prop 19 makes changes to property tax benefits: increasing property taxes for children or grandchildren of their parents’ properties but also giving older homeowners property tax breaks and providing tax relief for people affected by wildfires. The parent-child and qualifying grandparent-grandchildren property transfers portion of the act became effective on February 16, 2021. The new rules on transfers of base year value for those aged 55 and over will become effective on April 1, 2021.

street view of San Francisco Victorian style houses

Summary of New Parent-Child and Grandparent-Grandchild Transfer Rules Under Prop 19

Under now repealed Proposition 58/193, the following transfers of real property could have been made between parents and children without triggering a property tax reassessment:

  1. Principal residence exclusion: Each parent could have transferred during their lifetime, or at death, their primary residence (no value limit); and
  2. Lifetime $1 million non-principal residence exclusion: Up to the first $1 million dollars of assessed value of other properties could have been excluded (per transferor).

Effective February 16, 2021, Prop 19 changed the parent-child exclusion rules for property transfers so that the taxable value of all properties transferred from parent to child and grandparent to a qualifying grandchild will be reassessed to fair market value unless a child or qualifying grandchild moves into the primary residence of the transferor and uses the home as their primary residence. In the event a child/grandchild does make the inherited property their primary residence and the fair market value of the transferred property exceeds the tax assessed value by more than $1,000,000, Prop 19 provides a reduction of $1,000,000 on the new assessed value, the equivalent of an annual savings of approximately $10,000 in property taxes ($1,000,000 assessed value exclusion x 1% property tax rate).

Clarification on Certain Issues

Unfortunately, the text of Prop 19 is ambiguous and leaves many unanswered questions that are critical to implementing the new legislation. However, the California State Board of Equalization — the governing agency charged with prescribing rules and regulations to govern the proper implementation of Prop 19 and to ensure that county assessors uniformly implement the rules — has now issued initial guidance to help interpret the new legislation. The following commonly asked Q&A comes directly from their recently issued memorandum:

Q: Is Proposition 19 retroactive and are transfers that have already received the benefit of Proposition 58 (Parent-Child Exclusion) going to be reassessed?

A: No. Proposition 58 applies to transfers that occur on or before February 15, 2021, and Proposition 19 applies to transfers that occur on or after February 16, 2021.

Q: If a parent died prior to February 16, 2021, but the change in ownership forms are not filed with the assessor until after February 16, 2021, are the parent-child exclusion provisions applied under Proposition 58 (old rules) or Proposition 19 (new rules)?

A: For transfers by inheritance, the date of death is the change in ownership date.2

Q: A parent leaves his family home to his three children. Prop 19 requires that a family home continue as the family home of the transferee. Must the family home continue as the family home of all transferees?

A: No, only one transferee needs to maintain the family home as his or her principal residence. However, all transferees must be eligible transferees.

Q: Prop 19 requires that a family home continue as the family home of the transferee. By what date must a transferee establish the family home as his/her family home?

A: The transferee must establish the family home as his/her family home within one year of the purchase or transfer of the family home.

Q: Prop 19 requires that a family home continue as the family home of the transferee. How long must a transferee maintain the property as his/her family home for continued exclusion?

A: The exclusion applies only as long as the transferee or another transferee maintains the property as his or her family home.

In the event the family home is no longer used as the primary residence of a transferee, the property should receive the factored base year that applies had the family home not qualified for exclusion at the time of purchase or transfer. The new taxable value will be the fair market value of the home on the date of inheritance adjusted each year for the inflation factor.

Q: Prop 19 makes the parent-child exclusion applicable to family farms. Must a family farm also be the principal residence of the transferee?

A: No, the family farm does not need to be the principal residence of the transferee to qualify for the parent-child exclusion. A family farm is defined as any real property which is under cultivation or which is being used for pasture or grazing, or that is used to produce any agricultural commodity, as that term is defined in Section 1201 of the Government Code.

Base Year Value Transfers

Under California Proposition 60, if certain requirements (timing, value, residency, timely filed claim) were met, (1) a homeowner or the homeowner’s spouse who are at least 55 years of age or (2) a homeowner who is severely and permanently disabled can sell their primary residence and one time transfer the base year value of that property to a replacement residence of equal or lesser value.

Additionally, California Proposition 90 allows transfers of base year property value from one county to another county in California (intercounty) if the county a person is moving accepted the intercounty transfer.

Effective April 1, 2021, Prop 60 and 90 will be repealed and under Prop 19, an owner of a primary residence who is over 55 years of age, severely disabled, or a victim of a wildfire or natural disaster can transfer the base year value of their original primary residence to a replacement primary residence located anywhere in California that is purchased or newly constructed within two years of the sale of the original primary residence. 

Again, the language in Prop 19 is somewhat ambiguous so the California State Board of Equalization has also issued the following initial guidance on the new base year value transfer rules:

Q: Must both the sale of the primary residence and the purchase of a replacement primary residence be completed on or after April 1, 2021?

A: No, the operative requirement is that the transfer of the base year value must be on or after April 1, 2021, and not the purchase or sale of either the original or replacement property.

Q: Must a claimant be “severely disabled” or “severely and permanently disabled” under Prop 19?

A: Prop 19 requires that a claimant be “severely disabled,” not “severely and permanently disabled.”

Q: On what date is the value of the original and replacement primary residences determined for purposes of calculating the transferrable taxable value?

A: The value of the original and replacement primary residences are determined for purposes of calculating the transferrable taxable value as of the date of sale or the date of purchase or completion of new construction, respectively.

Q: How many times may spouses transfer an original primary residence pursuant to Prop 19?

A: Each spouse may transfer a base year value up to three times. A transfer completed pursuant to the previous base year value transfer provisions does not count toward the three-transfer maximum.

Under Prop 60/90, spouses were treated as a single claimant if the spouse was on title of the replacement residence.  With each eligible spouse now able to transfer base year value up to three times, individuals who divorce or whose spouse has died will have additional opportunities to transfer base year value.

The California State Board of Equalization will most like continue to update its guidance based on further questions, especially if additional legislation is passed. We will do our best to keep you updated as other issues are clarified. In the meantime, if you have questions or concerns, please contact a member of your B|O|S team.


Board of Equalization, “Memorandum: Proposition 19 — Initial Interpretational Questions and Answers,” January 8, 2021,

Board of Equalization, “Frequently asked questions,

Board of Equalization, “Property Tax Rules — Rule 462.260. Date of Change in Ownership,”

Board of Equalization, Proposition 19 Intergenerational Transfer Exclusion Guidance Questions and Answers,

Filed under: Financial Planning

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