Will passing your home to your kids reset its property taxes? This flowchart maps California's Prop 19 parent-child decision from start to finish.
Following the decision tree
California's Proposition 19 turned the old parent-child property tax exclusion into a conditional one. The flowchart walks the decision a family faces when a parent transfers a home to a child. The first and most important fork: will the child use the home as their own primary residence?
If the answer is no — the child will rent it, use it as a second home, or leave it vacant — the exclusion simply doesn't apply. The county reassesses the property to current fair-market value, and the child inherits a tax bill based on today's value, not the parent's decades-old basis.
When the home is a primary residence
If the child does move in as their primary residence, a second question decides the outcome: is the home's fair-market value more than $1,000,000 above the parent's old assessed value? (The cap is indexed and rises over time; this chart uses the round $1,000,000.)
- No — value is within the cap. The parent's old Prop 13 base transfers unchanged. No reassessment. This is the best-case outcome.
- Yes — value exceeds the cap. The child gets a partial exclusion: the new base equals fair-market value minus $1,000,000. Better than full reassessment, but not the full break.
Why families plan around this
The difference between branches can be thousands of dollars a year, every year, for as long as the child owns the home. That's why decisions about who moves in, how title is held, whether a trust is involved, and the timing of a transfer deserve careful attention — ideally before anything is recorded.
This flowchart is an educational simplification of a nuanced law. Real situations involve grandparent transfers, multiple heirs, trusts, and the indexed cap. Always confirm your specific plan with a licensed California estate-planning attorney and a CPA, and verify current figures with the State Board of Equalization or the county assessor.
The decision, visualized
Frequently Asked Questions
What's the first question Prop 19 asks for parent-child transfers?
Whether the child will use the inherited home as their own primary residence. If not, the exclusion doesn't apply and the home is reassessed to fair-market value. If so, a second test about the $1,000,000 cap decides the new base.
What happens if the child doesn't live in the home?
The parent-child exclusion does not apply. The county reassesses the property to current fair-market value, typically resulting in a much higher annual property tax than the parent paid.
What is the $1,000,000 cap?
If the child lives in the home, the exclusion covers the old assessed value plus $1,000,000 of additional market value. Above that, the new base is fair-market value minus $1,000,000. The cap is indexed and rises over time.
Is this flowchart legal advice?
No. It's an educational simplification. Real transfers involve trusts, multiple heirs, titling, timing, and the indexed cap. Confirm your plan with a licensed California estate-planning attorney and CPA before acting.
