Losing a parent is hard enough. Now, what happens to the family home? Here is how the rules work and how your family can plan.
If you inherit a parent’s home in California, you may be able to keep all or part of your parent’s lower taxable value, but only if the home becomes your primary residence within one year and you file the required claims on time. Since February 16, 2021, Proposition 19 (“Prop 19”) has limited the parent-child exclusion to a family home or family farm and capped how much value can be excluded. Rentals and vacation homes generally no longer qualify.
Now, what if you want to keep the family home? Can you afford it? When property is inherited, the general rule is that the value is reassessed for property tax purposes.
Key takeaways
- Prop 19 governs parent-child transfers on or after February 16, 2021, and for an inheritance the transfer date is generally the date of death.
- The home must have been your parent’s principal residence and become yours within one year, and you should file the exemption and Form BOE-19-P claims on time.
- For transfers from February 16, 2025 through February 15, 2027, market value above your parent’s taxable value plus $1,044,586 is added to your taxable value.
- Trusts, sibling buyouts, and entity ownership can change the result, so plan early.
What changed when Proposition 19 took effect?
Under Proposition 13 (“Prop 13”), property is generally reassessed to market value when ownership changes, and annual increases in assessed value are then capped at 2 percent. As a result, a longtime owner’s taxable value is often far below market value.
Before Prop 19, Propositions 58 and 193 let parents pass a principal residence to their children with no value limit, plus up to $1 million of factored base year value in other real property per parent.
Who qualifies for the parent-child exclusion under Prop 19?
A family home can qualify when:
- Eligible relationship. A parent and child, including stepchildren, sons- and daughters-in-law, children adopted before age 18, and certain foster children.
- Parent’s principal residence. The home was your parent’s principal residence.
- Your principal residence within one year. You move in within one year of the transfer.
- Exemption claim within one year. You file for the homeowners’ or disabled veterans’ exemption within one year, or relief generally starts only in the year you file.
- Exclusion claim. You file Form BOE-19-P with the assessor in the county where the home is located.
The exclusion lasts only while the home remains an eligible child’s principal residence. If it becomes a rental, then starting with the next January 1 lien date it is taxed on its market value from the original transfer, adjusted for inflation.
If siblings inherit together, only one needs to live there, and another eligible sibling can move in within one year of a move-out (and file for the exemption) to keep the exclusion.
How do you calculate your new taxable value?
- Start with your parent’s factored base year value (the taxable value just before the transfer).
- Add the exclusion amount for the transfer date. The Board of Equalization (BOE) set it at $1,044,586 for transfers from February 16, 2025 through February 15, 2027, up 2.15 percent from $1,022,600. BOE adjusts it every other year using the Federal Housing Finance Agency’s House Price Index for California.
- If market value on the transfer date is at or below that total, you keep your parent’s factored base year value.
- If it is higher, the excess is added to that value.
Example: a San Francisco home. Your parent passed away in 2026, leaving a home with a factored base year value of $400,000 and a market value of $1,800,000. You moved in and filed on time.
| Step | Amount |
|---|---|
| Parent’s factored base year value | $400,000 |
| Plus exclusion amount | $1,044,586 |
| Value limit | $1,444,586 |
| Market value at date of death | $1,800,000 |
| Excess above the limit | $355,414 |
| New taxable value ($400,000 plus $355,414) | $755,414 |
Without the exclusion, your taxable value would be $1,800,000. At the 1 percent general tax rate alone, the $1,044,586 difference is roughly $10,446 a year, before voter-approved bonds and local charges. These figures are illustrative only. Compare that to about $4,000 per year if the parent to child exclusion had been applied.
What happens to rentals, vacation homes, and family farms?
Rentals and vacation homes. Unless it qualifies as a family farm, a parent’s rental or vacation home is generally reassessed to market value when a child inherits it.
Family farms. Property under cultivation, used for pasture or grazing, or producing an agricultural commodity can qualify. No one needs to live there, and the value limit applies separately to each legal parcel.
Entity-owned property. The exclusion covers real property, not interests in an LLC, partnership, or corporation. Factor this into any entity formation planning for family real estate.
How do trusts and siblings affect the result?
Transfers through a trust can qualify, because the assessor looks through the trust to the beneficial owner. Deadlines generally run from your parent’s date of death, not from when the trustee deeds you the home, and the same is true in probate.
Transfers between siblings are not excluded, so if you buy out a sibling’s share, that share is generally reassessed.
Trust language matters. BOE says Proposition 19 did not change the property tax rules for trusts that divide assets “share and share alike.” Under that guidance, a trustee with non-pro rata distribution authority may be able to allocate the home to one child, up to that child’s share, while siblings receive other assets. But if the child keeping the home pays siblings with personal funds, BOE treats that as a purchase. Get advice before signing a distribution agreement during trust administration.
Can grandchildren use the Prop 19 exclusion?
Only in limited cases. All of the grandchild’s parents who are children of the grandparents must have died by the transfer date. The same residence, value limit, and filing rules apply, using Form BOE-19-G.
How is the base year value transfer for homeowners 55 and older different?
A separate Prop 19 benefit, operative April 1, 2021, lets eligible homeowners move their own taxable value to a replacement primary residence anywhere in California. It covers homeowners 55 or older or severely disabled (up to three times each) and owners whose home was substantially damaged or destroyed by wildfire or a Governor-declared disaster.
The replacement must be bought or newly built within two years of selling the original. The taxable value carries over unchanged if the replacement’s market value is no more than 100 percent of the original’s (bought before the sale), 105 percent (first year after), or 110 percent (second year); otherwise, it is increased. Claims (Forms BOE-19-B, BOE-19-D, or BOE-19-V) go to the replacement’s county assessor within three years.
A parent who sells a home to a child using the parent-child exclusion cannot also transfer that taxable value to a replacement home.
What should families do now?
- Keep records. Save recent tax bills, proof of your parent’s homeowners’ exemption, and proof of your move-in date.
- Calendar deadlines from the date of death. File the change in ownership statement (Form BOE-502-D) within 150 days, or by the time the inventory and appraisal are filed in probate. Move in and file the exemption within one year, then file BOE-19-P promptly. If a supplemental bill arrives first, qualifying heirs who file on time can receive a refund or cancellation for that period.
- Review titling and trust terms. Revisit your estate planning and wealth transfer plans, including whether your trustee can allocate the home to the child who will live there.
- Look beyond property tax. Lifetime gifts or sales to a child raise gift tax and capital gains questions, so involve your tax advisor.
Frequently asked questions
Do I have to live in my parent’s home to keep the lower property tax value?
For a family home, yes. It must become your principal residence within one year of the transfer (for an inheritance, generally the date of death), and you should file for the homeowners’ or disabled veterans’ exemption within that year. Family farms have no residence requirement.
What is the Prop 19 exclusion amount in 2026?
For transfers from February 16, 2025 through February 15, 2027, the amount is $1,044,586. Market value above your parent’s factored base year value plus $1,044,586 is added to your taxable value. BOE’s next adjustment is scheduled for February 2027.
Can siblings inherit the home together if only one lives there?
Generally yes. Only one eligible child needs to live in the home. If one sibling later buys out another, the purchased share is reassessed.
When is Form BOE-19-P due?
File it with the county assessor within three years after the transfer or before the property is transferred to a third party, whichever is earlier. It is also timely within six months after a supplemental or escape assessment notice for the transfer. A late claim generally brings relief only from the year you file.
Does Prop 19 apply if my parent died before February 16, 2021?
Generally no. Inheritances on or before February 15, 2021 fall under the older Proposition 58 and 193 rules. If no claim was filed, a late claim may still bring relief for future years if the property has not gone to a third party.
How JKZ LLP can help
JKZ LLP helps California families plan and complete transfers of homes and other property with the property tax consequences in view. We prepare estate plans, advise on titling, and guide trustees and heirs through trust administration and probate, including Prop 19 claims. A majority women owned, LGBTQ+-affirming firm, we serve clients from offices in San Francisco, San Diego, Santa Cruz, and Chico in English, Spanish, Russian, Arabic, and French. Call 415-693-0550 or contact us online.
This article is for general information only and is not legal or tax advice. Reading it does not create an attorney-client relationship.