On November 3, 2020, California voters approved Proposition 19 (Assembly Constitutional Amendment 11, Stats. 2020, res. Ch. 31.) Prop. 19 adds sections to the California Constitution which in part changes the rules on the parent-child and grandparent-grandchild exclusions (known as Prop. 58/193) for transfers on or after February 16,2021. Provided below are a few important changes approved by Prop. 19 for intergenerational transfers. If you would like to learn more about the implementation of Proposition 19’s intergenerational transfer exclusion, you may wish to read Letter to Assessors No. 2022/012 on the California State Board of Equalization’s website.
The value of the newly acquired property will be enrolled and billed as your new taxable value until your Prop 19 request is processed. This may take up to a year to complete depending on when your application was submitted. Once processed, a refund will be sent for any value difference. For more information please visit boe.ca.gov/prop19.
Prop. 19 requires adjustment of the taxable value if the fair market value of the family home exceeds the sum of the taxable value plus $1,000,000.
If the fair market value of the family home is less than the sum of the taxable value plus $1,0000,000, then the taxable value need not be adjusted.
If the fair market value of the family home is equal to or more than the sum of the taxable value plus $1 million, an amount equal to the fair market value of the family home upon purchase by, or transfer to, the transferee, minus the taxable value plus $1,000,000, is added to the taxable value.
A single family residence has a taxable value of $425,738. Parent dies on March 1, 2021, and property is inherited by parent's only child. The residence was the principal residence of both parent and child. On parent's date of death, property has a fair market value of $1,750,000.
The transfer of property between husband and wife does not result in a reappraisal for property tax purposes. This includes transfers resulting from divorce or death of the spouse. No form is required for this exclusion, but proof of the spousal relationship may be required.