Under Proposition 19 (effective February 2021), a parent transfers their primary residence to their child. The home has an assessed value of $200,000 and a current market value of $900,000. The child does not occupy the home as their primary residence. What is the property tax consequence?
Correct Answer
D) The property is reassessed at its current market value of $900,000 because the child does not use it as a primary residence
Under Proposition 19, the parent-child transfer exclusion from reassessment applies only if the child uses the transferred property as their primary residence within one year of the transfer. Because the child does not occupy the home as a primary residence, the exclusion does not apply and the property is reassessed at its current market value of $900,000. Note that even when the exclusion does apply, it is not unlimited — if the market value exceeds the parent's assessed value by more than $1,000,000, the excess above that threshold is added to the assessed value.
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