Only if a child moves in and files for the homeowners' exemption within one year, and only up to a cap. What Prop 19 changed for inherited California homes.
3 min read
For decades, a California parent could leave a house to a child and the child kept the parent's low Prop 13 taxable value, whether or not they lived there. Proposition 19 ended that for most homes. It is a different rule from the one that helps older owners move, and families often confuse the two.
What the exclusion covers now
The California Board of Equalization (BOE) says Prop 19 limits the parent-child and grandparent-grandchild exclusion to a family home that is the transferor's principal residence and becomes the heir's principal residence, or a family farm. A rental passed from parent to child does not qualify. The rule applies to transfers on or after February 16, 2021.
The one-year deadline
To get the exclusion on a family home, the heir has to file for the homeowners' exemption within one year of the transfer or date of death. BOE's filing checklist says the exclusion is applied only going forward if that filing comes after the one-year mark. A separate claim for the exclusion itself, form BOE-19-P for a parent-child transfer, is due within three years of the transfer or before the home passes to a third party, whichever is earlier.
The one-year step is the one most families miss. It is a short form to the county assessor, and it needs the heir to actually live in the home. The homeowners' exemption guide explains how it works.
The cap
The exclusion covers the home's taxable value plus a set amount, which BOE adjusts every two years. That amount is $1,044,586 for transfers from February 16, 2025 to February 15, 2027. If the market value is higher than the cap, the excess is added to the taxable value.
BOE gives this example. A family home has a taxable value of $300,000 and a market value of $1,500,000. The cap in BOE's example is $300,000 plus $1,000,000, so $1,300,000. The $200,000 over the cap is added to the taxable value, making it $500,000. Using today's adjusted amount the arithmetic is the same, with a slightly larger cap.
Keeping it
At least one heir has to continue living in the home as their principal residence. BOE says that once the home stops being that heir's principal residence, it receives a new taxable value as of the lien date after the move, set at its market value on the date it was inherited and adjusted each year since. Only one of several heirs needs to move in and file for the exclusion to apply to the whole home.
Trusts and the rest of the picture
BOE's rules treat the transfer on death the same way whether or not the home was in a trust. A living trust does not by itself avoid the new rules. Property tax is also only one part of an inheritance. The income tax treatment of selling an inherited home is covered in the guide on step-up basis for an inherited California house, and the court side is in the probate sale guide.
The next step
An heir who inherits a home and is over 55 can sometimes sell it and carry its taxable value to another home, as long as the inherited home was their principal residence. That is a different Prop 19 rule, covered in the base year value transfer guide. This article is general information from BOE's published rules, not tax or legal advice. Anyone facing the one-year deadline should confirm it with the county assessor and an estate attorney. If the family decides to sell instead of keeping the home, the home value tool is a place to start.
Quick questions
Do heirs automatically keep a parent's low property tax value?
No. Since Prop 19, the family-home exclusion applies only when the home becomes the heir's principal residence, and the heir must file for the homeowners' exemption within one year of the transfer or death.
What is the cap on the exclusion?
The home's taxable value plus a set amount that BOE adjusts every two years. For transfers from February 16, 2025 to February 15, 2027 the amount is $1,044,586. Anything above the cap is added to the taxable value.
Does a living trust avoid the new rule?
No. The same rules apply to a transfer that happens when the owner dies, whether the home was held in a trust or not.
What about a rental or a second home?
Prop 19 limits the exclusion to a family home that becomes the heir's principal residence, or a family farm. A rental or second home passed to a child does not qualify.
What if the heir moves out later?
At least one qualifying heir has to keep living in the home. Once it stops being their principal residence, the home gets a new taxable value from the next lien date, based on market value at the date of the inheritance.
Source: California Board of Equalization, Proposition 19
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