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March 9, 2022

California guidance addresses Proposition 19 changes to property tax consequences of certain real property transfers

In Letters to Assessors, the California State Board of Equalization (CA SBE) provided advice on implementing certain changes to California's property tax law stemming from voters' approval of Proposition 19 (Prop 19) in November 2020.1 Letter to Assessors No. 2022/012 (February 24, 2022) (CA SBE Letter 2022/012) provides guidance on implementing changes to the exclusion for property transfers between parents and their children and grandparents and their grandchildren. Letter to Assessors No. 2022/009 (February 17, 2022) (CA SBE Letter 2022/009) addresses the impact of Prop 19 on transfers of base-year value.

Parent-child and grandparent-grandchild exclusion

Prop 19 changed the parent-child and grandparent-grandchild exclusion (which is also commonly known as the intergenerational transfer exclusion) under California property tax law by limiting the ability to avoid property tax reassessment when a home passes from a parent to a child or from a grandparent to a grandchild when the grandchild's parents are deceased. Prop 19 limits the benefit of the parent-child exclusion to a primary residence and caps the exclusion to the current assessed value plus $1 million. Similar rules apply to a grandparent-grandchild transfer. For example, as described in CA SBE Letter 2022/012, assume a primary residence has a factored base year value (FBYV) of $300,000 and a fair market value of $2m. Using these assumptions, the difference between the full cash value and value cap is $700,000 ($2m - $1.3m). Thus, the new taxable value to be enrolled as of the parent's death is $1m ($300,000 + $700,000). (CA SBE Letter 2022/012 pgs. 3-4 (Example 2).

This change applies to transfers occurring on and after February 16, 2021.2

Transfers of base year value

Prop 193 also expanded the rules for transferring base year value to a property owner's primary residence if the owner is (1) over the age of 55, or (2) severely disabled.4 Cal. Rev. & Tax. Code Section 68.6, which was added by the Legislature in response to Prop 19, allows the base year value to transfer to the purchase of a home anywhere in California. Previously, the law only allowed the base year value to be transferred if the transfer occurred within the same county or if the new county into which the base year value was transferred had authorized an intercounty transfer by ordinance. As of November 2018, 10 California counties had authorized intercounty transfers by ordinance.

Prop 19 also redefined how the FBYV is calculated. The new law permits the FBYV of the old home to be transferred to any replacement property, not just to a home of equal or lesser value. If the replacement property's market value exceeds the fair market value of the sold property, the difference between the two values is added to the transferring FBYV.

Additionally, Prop 19 permits an eligible property owner (i.e., a person 55 years or older or severely disabled) to use this FBYV transfer exception three times. Previously, an eligible property owner could transfer the base year value only once. This benefit only applies to transfers of primary residences.

These changes applies to transfers occurring on and after April 1, 2021.5


Prop 19 and the associated changes to California's property tax law statutes limit the ability to transfer a residence among certain family members; at the same time, they also expand the ability to sell California real property and, therefore, move freely to other locations around the state while still receiving a property tax benefit. These new provisions should enable California property taxpayers to move more frequently and might alleviate the property tax restrictions that discourage Californians from moving, thereby freeing up residential housing in the exceedingly tight California housing market.

For more information on the changes made by Prop 19, please reference the CA SBE Website or the Letters to Assessors referenced in this Alert or reach out to a member of the California Property Tax Team listed below.


Contact Information
For additional information concerning this Alert, please contact:
   • Tom Bernard (
   • John Corum (
   • Amanda Fraerman (
   • Elvin Valverde (


1 Prop 19 was approved by California voters on November 3, 2020. Legislative language implementing Proposition 19 was enacted in 2021 (Cal. Laws 2021, ch. 427 (SB 539)).

2 Cal. Rev. & Tax Code Section 63.2(a) as amended by SB 539, consistent with Prop 19.

3 Prop 19 supersedes Proposition 60/90/110.

4 Prop 19 also changes the base year transfer value for victims of wildfires and natural disasters. Those changes are not discussed in this Alert.

5 Cal. Rev. & Tax Code Section 69.6.