Proposition 19 and Your Family Home: What Happens When You Inherit Property?
Proposition 19 dramatically changed California's inheritance rules on February 16, 2021. This date marked when the restrictions on parent-child transfers took effect—Proposition 19 also included benefits for seniors downsizing, which had a different implementation timeline. 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.
Quick Navigation
| Section | Key Insight |
|---|---|
| Old vs. New Rules | What changed on February 16, 2021 |
| Primary Residence Requirement | Child must move in within 1 year |
| Value Cap | $1,044,586 exclusion limit (2025-2027) |
| Rental/Vacation Homes | Now fully reassessed (no protection) |
| Filing Deadline | 3 years to file BOE-19-P form |
What Changed on February 16, 2021: The Old Rules vs. Proposition 19
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.
The Old Rules (Before February 16, 2021)
Under Propositions 58/193, parents could transfer to their children:
- Their primary residence of any value (no limit) without reassessment
- Up to $1 million in assessed value of other real estate (rentals, vacation homes, commercial property, land)
- Children could use inherited property however they wanted: live in it, rent it out, or use it as a vacation home
- No occupancy requirements—the tax protection was automatic
The New Rules (After February 16, 2021)
Under Proposition 19, the parent-child exclusion now applies only if:
- The property was the parent's primary residence (not rentals or vacation homes)
- The child moves in and establishes it as their primary residence within one year
- The child files for the homeowner's exemption within one year
- The property's market value doesn't exceed the parent's tax base plus $1,044,586 (2025-2027 limit, adjusted every 2 years for inflation)
- The child continues living in the home—if they move out or convert it to a rental, the exclusion is removed
Everything else is fully reassessed at current market value.
The Critical One-Year Primary Residence Requirement
This is the rule that catches most families off guard. The inherited property must become the child's principal residence within one year of the transfer date or date of death, whichever applies.
What "Primary Residence" Means
To qualify for the exclusion, the child must:
- Actually live in the property as their main home
- File for the homeowner's exemption (form BOE-266) within one year
- Provide proof of occupancy if requested: utility bills, voter registration, driver's license showing the property address
- Continue living there—the exclusion is removed the day they move out
If multiple children inherit: At least one child must move in and live there as their primary residence. Not all children need to occupy the property, but at least one must.
The One-Year Deadline Is Absolute
From the date of transfer or date of death, the clock starts ticking. If the child doesn't move in within 12 months, the entire exclusion is forfeited—even if they eventually move in later.
Example: The Missed Deadline
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 measured from her mother's date of death. The home is reassessed at full market value ($1.8 million). Her annual property taxes jump from approximately $3,600 to $21,600—an increase of $18,000 per year. This reassessment is permanent and cannot be reversed.
*Property tax rates in LA County typically range from 1.16% to 1.25% depending on local assessments and voter-approved debt. The 1.20% rate used in these examples represents a typical mid-range rate for illustrative purposes. Your actual rate may vary slightly based on your specific location.
The $1,044,586 Value Cap: Understanding the Exclusion Limit
Even if your child moves in on time, there's a cap on how much value can be protected from reassessment.
How the Cap Works (2025-2027)
For transfers occurring between February 16, 2025 and February 15, 2027, the exclusion amount is $1,044,586. This figure is adjusted every two years based on California home price inflation.
The exclusion formula:
- Protected Amount = Parent's Prop 13 Tax Base + $1,044,586
- If the property's market value exceeds this amount, the excess is added to the tax base
Historical Cap Amounts
| Transfer Date | 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 |
The Filing Process: Form BOE-19-P and Critical Deadlines
Even if your child meets all the requirements, they must file the correct paperwork on time or lose the exclusion.
Required Forms
Form BOE-19-P: Claim for Reassessment Exclusion for Transfer Between Parent and Child (transfers on or after February 16, 2021)
Form BOE-266: Claim for Homeowners' Property Tax Exemption (must be filed within one year of transfer)
Both forms are filed with the County Assessor where the property is located.
Critical Filing Timeline
| Action | Deadline | Consequence of Missing |
|---|---|---|
| Move into property | Within 1 year of transfer/death | Total loss of exclusion |
| File homeowner's exemption | Within 1 year of transfer/death | Prospective relief only (no retroactive benefit) |
| File BOE-19-P | Within 3 years of transfer/death | Prospective relief only (no retroactive benefit) |
Common Prop 19 Inheritance Scenarios
Scenario 1: The Out-of-State Child
Situation: Mom passes away, leaving her $1.6 million Altadena home (with a $280,000 tax base) to her daughter who lives in Texas. The daughter has a career and family in Texas and doesn't want to relocate.
Decision: The daughter doesn't qualify for the exclusion because she can't (and doesn't want to) move into the home as her primary residence. The home is fully reassessed at $1.6 million. Annual property taxes jump from $3,360 to $19,200.
Best Strategy: Sell the home. The daughter inherited at stepped-up basis (no capital gains tax on the $1.6M value), and selling quickly avoids years of high property tax bills.
Scenario 2: The Multiple Siblings
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.
Decision: 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 the Prop 19 protection as long as she lives there.
Calculation:
- Protected amount = $350,000 + $1,044,586 = $1,394,586
- Market value = $2.2 million
- Excess = $805,414
- New tax base = $1,155,414 (partial reassessment)
Result: Annual property taxes are approximately $13,865 instead of $26,400. The three siblings share the tax bill (about $4,622 each). This is manageable, and Sarah gets to live in the family home.
Frequently Asked Questions
Should You Downsize Now or Keep the Home for Your Children?
This question has become more complex under Proposition 19. In my 13+ years working with LA County families, I've watched this decision become significantly more complex under Proposition 19. Many parents who assumed their children would want the family home are discovering that today's adult children have different housing preferences and career paths—often in different cities entirely. The automatic tax benefit that once made "keep it for the kids" an obvious choice is now conditional on choices your children may not want to make.
Consider Downsizing Now If:
- Your children don't want to live in your home. If they have their own homes and careers elsewhere, the Prop 13 protection will be lost anyway under Prop 19. Downsize and enjoy the equity now.
- Your home is worth much more than your tax base + $1M. If your $2.5 million home has a $300,000 tax base, even if your child moves in, they'll face partial reassessment. The benefit is smaller for very high-value properties.
- You want a smaller, more manageable space now. With Proposition 19's base year value transfer for seniors 55+, you can downsize and keep your low tax rate. Use it to improve your retirement lifestyle.
Next Steps: Getting Professional Guidance
Proposition 19's inheritance rules are complex, and mistakes are costly. If you're considering how this law affects your family, you need expert guidance.
📞 323-684-4421
🌐 lametrohomefinder.com
Confidential consultation. We'll help you understand how Proposition 19 affects your specific situation and connect you with the right professionals.
About Justin Borges
Justin Borges is a Pasadena-based real estate expert with 13+ years of experience helping Los Angeles families navigate complex property transitions. With over $200M in career sales, Justin specializes in educating homeowners about how Proposition 19 affects both downsizing and estate planning decisions. He works closely with estate planning attorneys and tax professionals to provide comprehensive guidance.
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 before making any decisions about property transfers or inheritance planning.
Tax Disclaimer
Calculations presented are for illustration purposes only and may not reflect your actual tax liability. Property tax rates, exclusion amounts, and rules are subject to change. The $1,044,586 exclusion amount applies only to transfers occurring between February 16, 2025 and February 15, 2027, and will be adjusted again in 2027. For current exclusion amounts and precise calculations specific to your property, consult with a California property tax professional.
Estate Planning Disclaimer
This article does not constitute estate planning advice. Proposition 19 has significant implications for wills, trusts, and estate plans created before February 16, 2021. Many previously effective estate planning strategies no longer work under the new rules. Consult with an estate planning attorney licensed in California to review and update your estate plan in light of Proposition 19's changes.
