Proposition 19 and Your Family Home: What Happens When You Inherit Property?

The Direct Answer

Under Proposition 19, your children can only keep your low Prop 13 property tax base if they move into your home as their primary residence within one year AND the property value doesn't exceed your tax base plus $1,044,586 (2025-2027 limit). Vacation homes, rental properties, and second homes are now fully reassessed when inherited-no exceptions.

⚠ Critical Deadline

The one-year deadline to move in and file for homeowner's exemption is absolute. Miss it by even one day, and the exclusion is permanently forfeited-there are no exceptions or extensions.

1 Year

Move-In Deadline

From transfer date

$1.04M

Value Cap

Above tax base

3 Years

Filing Deadline

For BOE-19-P

Primary

Residence Only

No rentals/2nd homes

What Changed on February 16, 2021

Effective Date: February 16, 2021

For over 30 years, California parents could transfer their property-including vacation homes, rental properties, and primary residences-to their children without triggering property tax reassessment. This generous exclusion, created by Propositions 58 (1986) and 193 (1996), allowed families to preserve low Prop 13 tax bases across generations.

Proposition 19 eliminated most of these protections.

Before Prop 19 (Pre-Feb 2021)

✓ Primary residence of any value transferred without reassessment

✓ Up to $1 million in other real estate (rentals, vacation homes)

✓ Children could use property however they wanted

✓ No occupancy requirements-protection was automatic

After Prop 19 (Current Rules)

✕ Only parent's primary residence qualifies

✕ Child must move in within 1 year

✕ Value cap of tax base + $1,044,586

✕ Rentals/vacation homes fully reassessed

The 5 Requirements to Keep Your Parent's Tax Base

All Requirements Must Be Met-No Exceptions

1

Parent's Primary Residence Property must have been parent's main home at time of transfer

2

Move In Within 1 Year Child must establish as their primary residence within 12 months

3

File Homeowner's Exemption Form BOE-266 filed within 1 year of transfer date

4

Meet Value Cap Market value ≤ parent's tax base + $1,044,586 (2025-2027)

5

Continue Living There Exclusion removed immediately if child moves out

!

File BOE-19-P Form Claim filed within 3 years (prospective relief only if late)

Critical Filing Deadlines

1 YEAR

From transfer

Move Into Property

Establish as primary residence with proof: utility bills, voter registration, driver's license

Miss this → TOTAL LOSS of exclusion (permanent)

1 YEAR

From transfer

File Homeowner's Exemption (BOE-266)

Filed with County Assessor where property is located

Miss this → Prospective relief only (no retroactive benefit)

3 YEARS

From transfer

File BOE-19-P Claim

Claim for Reassessment Exclusion for Transfer Between Parent and Child

Miss this → Prospective relief only (no retroactive benefit)

The Value Cap: $1,044,586 Exclusion Limit (2025-2027)

Even if your child moves in on time, there's a cap on how much value can be protected from reassessment. The exclusion amount is adjusted every two years for inflation.

Transfer Date Range

Exclusion Amount

Feb 16, 2021 – Feb 15, 2023

$1,000,000

Feb 16, 2023 – Feb 15, 2025

$1,022,600

Feb 16, 2025 – Feb 15, 2027

$1,044,586 ← CURRENT

How The Cap Works

Protected Amount = Parent's Prop 13 Tax Base + $1,044,586
If market value exceeds this amount, only the excess is added to the new tax base (partial reassessment).

Required Filing Forms

BOE-19-P

Claim for Reassessment Exclusion for Transfer Between Parent and Child. Required for all transfers on or after February 16, 2021. File within 3 years.

BOE-266

Claim for Homeowners' Property Tax Exemption. Must be filed within one year of transfer to prove primary residence status.

Both forms are filed with the County Assessor where the property is located.

Real Scenarios: What Happens in Practice

Scenario 1: The Missed Deadline

Exclusion Lost

Situation Sarah inherits her mother's $1.8 million Pasadena home (with a $300,000 tax base) in March 2024. She's dealing with grief, managing the estate, and hasn't decided what to do yet. By May 2025-14 months later-she finally moves in and files for the homeowner's exemption.

Result

Sarah missed the one-year window. The home is fully reassessed at $1.8 million. This reassessment is permanent and cannot be reversed.

Old annual property taxes: ~$3,600
New annual property taxes: ~$21,600
Annual increase: $18,000/year FOREVER

Scenario 2: The Out-of-State Child

Best Strategy: Sell

Situation Mom passes away, leaving her $1.6 million Altadena home (with a $280,000 tax base) to her daughter who lives in Texas with an established career and family. The daughter doesn't want to relocate.

Result

The daughter doesn't qualify for the exclusion because she can't move in as her primary residence. The home is fully reassessed at $1.6 million.

Old annual taxes: ~$3,360 → New annual taxes: ~$19,200

Best strategy: Sell the home. The daughter inherited at stepped-up basis (no capital gains tax on the $1.6M value). Selling quickly avoids years of high property tax bills.

Scenario 3: Multiple Siblings (Partial Protection)

Significant Savings

Situation Parents leave their $2.2 million San Marino home (with a $350,000 tax base) to three adult children equally. One child (Sarah) lives locally and is willing to move in. The other two live out of state.

Result

Sarah moves into the home within one year and files for the homeowner's exemption. Even though she owns only a 1/3 interest, the entire property gets Prop 19 protection as long as she lives there.

Protected amount: $350,000 + $1,044,586 = $1,394,586
Market value: $2,200,000
Excess (reassessed): $805,414
New tax base: $1,155,414 (partial reassessment)

Annual taxes: ~$13,865 (instead of $26,400)
Each sibling's share: ~$4,622/year

If Your Child Moves Out Later

The exclusion is immediately removed as of the date your child moves out or converts the property to a rental. The property will be reassessed at its current market value as of the original inheritance date (adjusted for inflation). This reassessment is effective the following tax year.

Should You Downsize Now or Keep the Home?

Making the Right Decision for Your Family

Consider Downsizing Now If:

→ Your children don't want to live in your home (have careers elsewhere)

→ Your home is worth much more than tax base + $1M

→ You want a smaller, more manageable space now

→ You qualify for Prop 19's base year value transfer (55+)

Consider Keeping the Home If:

→ A child genuinely wants to live there as their primary residence

→ Property value is close to or under the exclusion cap

→ Strong sentimental attachment to family home

→ Child can commit to long-term residency

Need help deciding? The Borges Real Estate Team works with families navigating Prop 19 decisions. Call (213) 262-5092 for a consultation.

Frequently Asked Questions

Q Can I transfer my vacation home to my children without reassessment?

No. Under Proposition 19, only properties that were your primary residence at the time of transfer qualify for the exclusion. Vacation homes, second homes, and rental properties are fully reassessed at current market value when inherited.

Q Do all my children need to move into the inherited home?

No. If you leave the property to multiple children, at least one must move in and establish primary residence within one year. That one child's occupancy protects the entire property for all children who inherit it.

Q What happens if my child moves out after getting the exclusion?

The exclusion is immediately removed as of the date your child moves out. The property will be reassessed at its current market value as of the date your child originally inherited it (adjusted for inflation). The reassessment is effective the following tax year.

Q What is the Proposition 19 exclusion cap for 2025-2027?

For transfers occurring between February 16, 2025 and February 15, 2027, the exclusion amount is $1,044,586. This means your child can inherit property valued at up to your tax base plus $1,044,586 without any reassessment. Values exceeding this amount will be partially reassessed.

Q What proof of primary residence is required?

The County Assessor may request utility bills, voter registration, driver's license, vehicle registration, and tax returns-all showing the inherited property as the primary address. The child must also file for the homeowner's exemption (Form BOE-266) within one year.

Q Can grandparents transfer property to grandchildren under Prop 19?

Only if the grandchild's parent (who would have been in the middle) is deceased at the time of transfer. The same rules apply: must be grandparent's primary residence, grandchild must move in within one year, and value cap applies.

JB

Justin Borges

Justin Borges is Team Leader of The Borges Real Estate Team at eXp Realty. With over 13 years of experience and more than $200 million in career sales, Justin specializes in helping Los Angeles families navigate complex property transitions including Proposition 19 inheritance planning and downsizing decisions.

$200M+ Sold 13+ Years Experience DRE #01940318

Legal Disclaimer: This article provides general information about Proposition 19's inheritance rules and is not legal, tax, or estate planning advice. Property tax and inheritance laws are complex, and individual circumstances vary significantly. The one-year occupancy deadline and filing requirements are strictly enforced-failure to meet them results in full property tax reassessment with no exceptions. Always consult with a qualified estate planning attorney, tax professional, and property tax consultant for advice specific to your family's situation.

Tax Disclaimer: Calculations are for illustration only and may not reflect your actual tax liability. Property tax rates in LA County typically range from 1.16% to 1.25% depending on local assessments. The $1,044,586 exclusion applies only to transfers between February 16, 2025 and February 15, 2027. Contact The Borges Real Estate Team at (213) 262-5092 | 680 E Colorado Blvd Suite 180, Pasadena, CA 91101.