Prop 19's $1M Inherited-Property Exclusion Cap Resets Feb 2027 — What That Means Now
A lot of "inherited property tax" content still describes the old, uncapped Prop 58 rules. Prop 19 replaced them in 2021, and the new exclusion cap moves on a two-year clock.
Before 2021, a parent could pass a home to a child and the child would keep the parent's old, low Prop 13 assessed value indefinitely, no matter what the home was worth or whether the child lived in it. Prop 19 ended that. Now, for transfers between 2025-02-16 and 2027-02-15, a child who moves in as their primary residence within a year keeps the parent's factored base year value plus up to $1,044,586 of the home's market value above that base — anything above the combined cap gets added to the base year value and reassessed at current market rate.
The cap is not a cliff — it's a partial exclusion
The most common misunderstanding is treating the cap as a threshold you either clear or don't. It isn't. Say a parent's home has a factored base year value of $300,000 and a market value of $1.5M at the time of transfer.
The difference is $1.2M, which is more than the current $1,044,586 exclusion. The child doesn't lose the exclusion entirely — they still get the full $1,044,586 excluded, and only the remainder above that gets added to the new base year value.
The new assessed value ends up well below full market value, just not as low as the parent's original number.
Why the cap keeps moving
The exclusion cap isn't fixed — the State Board of Equalization adjusts it every two years. The current figure of $1,044,586 applies only to transfers from 2025-02-16 through 2027-02-15, with the next adjustment expected 2027-02-16. A calculator or article that hardcodes today's number without a review date will quietly go stale the moment that window closes — which is exactly the kind of drift this site's own data pipeline is built to avoid.
The rule that trips up more families than the dollar cap: primary residence
Since Prop 19 took effect, the exclusion only applies at all if the child (or grandchild, in a qualifying case) moves into the inherited home as their principal residence within one year of the transfer and files for the homeowners' exemption on it.
Rental property, a vacation home, or a home the heirs plan to sell without living in it first does not qualify for any exclusion under this rule, regardless of value — this is a stricter condition than the pre-2021 Prop 58 rules, which had no occupancy requirement at all.
Filing the standard $7,000 homeowners' exemption on the property is effectively the paper trail that establishes the occupancy claim.
This is separate from the age-55+ transfer rules
Prop 19 also created a different benefit — letting homeowners 55 or older, severely disabled, or disaster victims carry their own base year value to a replacement home anywhere in the state. That's a distinct rule from the parent-child exclusion covered here; don't confuse the two when reading Prop 19 coverage, since a lot of general-audience articles blend both provisions under one "Prop 19" headline.
Run your own numbers
The math above — factored base year value, the current exclusion cap, and what actually gets reassessed — is exactly what our Prop 19 Inherited Property Calculator runs automatically, using the exclusion cap and effective window straight from official BOE figures rather than a hardcoded number.
Frequently Asked Questions
What is the Prop 19 inherited property exclusion cap right now?
For transfers occurring between 2025-02-16 and 2027-02-15, the exclusion covers the home's factored base year value plus up to $1,044,586 of market value above that. The cap adjusts every two years, so it will change again after 2027-02-15.
Do I lose the exclusion entirely if the home is worth more than the cap?
No. You keep the exclusion up to the cap, then the amount above it gets added to the base year value and reassessed at market rate — it isn't an all-or-nothing cutoff.
Does a rental or vacation home inherited from a parent qualify?
No. Since Prop 19 took effect, the child must move into the home as their primary residence within one year of the transfer for any exclusion to apply. Rental, investment, and vacation properties do not qualify at all, regardless of value.
This article is for general information only and is not legal or tax advice. Confirm your exact base year value and exclusion amount with your county assessor before making an inheritance or estate-planning decision.