A parent in California transfers their primary residence to their adult child, and the child claims the Proposition 19 parent-child exclusion and occupies the home as a primary residence. The parent's Proposition 13 factored base year value is $200,000 and the home's market value at the time of transfer is $1,400,000. The exclusion amount in effect for the transfer is $1,044,586. What is the child's new taxable value?
Correct Answer
B) $355,414
Proposition 19 excludes a parent-child transfer of a primary residence only up to a capped amount. The ceiling is the parent's factored base year value plus the exclusion amount, which the Board of Equalization adjusts for inflation every other year: $200,000 + $1,044,586 = $1,244,586. Market value above that ceiling is added to the base, so the excess is $1,400,000 - $1,244,586 = $155,414, and the new taxable value is $200,000 + $155,414 = $355,414. The same result comes from market value minus the exclusion amount, $1,400,000 - $1,044,586.
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