For decades, California real estate was one of the most reliable ways for a family to build wealth. Parents could leave a home to their children without the next generation being forced to sell just to pay a property tax bill that had jumped to current market value. That changed for transfers on or after February 16, 2021, when Proposition 19 took effect.
If you own a home in the Santa Clarita Valley (Valencia, Saugus, Stevenson Ranch, Canyon Country and nearby) or expect to inherit one, Prop 19 is part of protecting your family's finances.
What Prop 19 changed
Under the old rules (Proposition 58), parents could transfer a primary residence of any value to their children with no reassessment. They could also transfer up to $1 million of assessed value in other real estate, such as a rental or vacation home, with no reassessment. Prop 19 ended those protections for most property and replaced them with narrower ones.
The rules today
The parents' family home.
The property must have been the parent's principal residence. Rentals, vacation homes, commercial property and a home the parents did not live in generally no longer qualify. A family farm can qualify without a family home if the land is farmed or used for grazing or pasture.
The child must move in.
The child has to make the home his or her primary residence within one year of the transfer and keep living there. The State Board of Equalization states there are no exceptions to the one-year requirement.
The child must claim the exemption.
The child files for the homeowners' (or disabled veterans') exemption, then files the exclusion claim (Form BOE-19-P). The claim is generally due within three years of the transfer and before any transfer to a third party.
There is a value cap.
The child keeps the parents' factored base year value only if the home's market value does not exceed that value plus $1 million, adjusted for inflation. The adjusted figure is $1,044,586 for transfers from February 16, 2025 through February 15, 2027. Any market value above the cap is added to the taxable value.
The exclusion can end.
If the home stops being the child's family home, for example it becomes a rental, the property is reassessed to the market value on the date the child received it, starting with the next January 1 lien date.
A Valencia example: the child keeps the home as a rental
Say the parents' assessed value is $200,000 and the market value when the child inherits is $900,000. If the child rents the house out instead of moving in, there is no exclusion and the home is reassessed to $900,000. At an illustrative combined rate of about 1.2%, the annual property tax goes from roughly $2,400 to roughly $10,800. For many families that overhead erases the rental's profit and forces a sale.
An example of the value cap
Say the parents' factored base year value is $300,000 and the home is worth $1,500,000 when the child inherits and moves in. The cap is $300,000 + $1,044,586 = $1,344,586. The home is $155,414 over the cap, so that amount is added to the base. The child's new taxable value is $455,414 instead of $1,500,000. The child still comes out well ahead of a full reassessment, but not at the parents' old number.
Estate planning mistakes to avoid
Adding a child to title during life.
Deeding part of your home to a child, for example as a joint tenant, can trigger a partial reassessment, create gift tax filing issues and cost your child the stepped-up basis for capital gains taxes later.
Assuming a living trust solves it.
A revocable living trust is excellent for avoiding probate, but it does not by itself preserve the parent-child exclusion. The trust has to be administered correctly after the parents' deaths, including who receives the home and who files the claim.
The rules and the dollar cap are adjusted over time and the Legislature can change them, so confirm the current figures with the county assessor or the State Board of Equalization before you act. Sources: California State Board of Equalization, Letter To Assessors 2025/015 (Proposition 19 parent-child exclusion), and the Revenue and Taxation Code section 63.2.