Transfers to children are allowed under Prop 19 but they are more restrictive than under Prop 58
Applicable to transfers that occurred on or after February 16, 2021, property transferring fromparent to child avoids reassessment only for:
- Transfers of principal residences and family farms (transfers of nonprincipal residences/family farms no longer qualify for relief from a change-of-ownership reassessment);
- The first $1 million of additional assessed value of the principal residence (anything above this amount will be subject to reassessment); and
- Property that is used as the child’s/grandchild’s principal residence/family farm. (If the child/grandchild does not use the home as their principal residence, the entire value of the property will be subject to reassessment).
the property using the following formula:
- If the FMV immediately before the transfer is less than the assessed value plus $1 million, then the new assessed value = assessed value + $0; and
- e.g. FMV = 1.4 million; Assessed value = 500k; Assessed value remains 500k
- 1.4 million is less than 500k + 1 million
- If the FMV immediately before the transfer is equal to or more than the assessed value plus $1 million, then the new assessed value = assessed value + FMV immediately before the transfer – assessed value - $1 million. (R&TC §63.2(d))
- e.g. FMV = 2.3 million; Assessed value = 700k; Assessed value will be 1.3 million
- 2.3 million is more than 700k + 1 million
Miscellaneous
- If one child moves out and another qualifying child moves in, the exclusion will remain in effect,
but only if both children were named in the transfer document. If a parent left the house to one child
and stock to another child, then the exclusion will only apply if the child to whom the house was left
resides in the home. - There is no limit to the number of times a transferor can utilize this portion of the parent–child
exclusion. This means taxpayers could transfer their principal residence to a child, move into
another residence, and then transfer that property as a principal residence as well. - When property is held in a revocable trust that becomes irrevocable upon the death of the
parent transferor, the clock for filing the homeowners’ exemption (a requirement to transfer
the base year value) begins to run upon the date of death, not on the date of the recording of
the deed. - As before, the same exclusion applies to transfers between grandparents and grandchildren as
long as both of the grandchild’s parents are deceased as of the date of the transfer.
Forms to file
- BOE-19-G, Claim for Reassessment Exclusion for Transfer Between Grandparent and
Grandchild Occurring on or after February 16, 2021; or - BOE-19-P, Claim for Reassessment Exclusion for Transfer Between Parent and Child
Occurring on or After February 16, 2021.
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