On November 3, 2020, California voters approved Proposition 19, which introduced new property tax rules that can benefit families transferring ownership of family farms. The law, effective from February 16, 2021, allows the transfer of a family farm between parents and children without triggering a change in ownership for property tax purposes. This provision enables the recipient to keep the taxable value established by the previous owner.
“Taxable value” is defined as the base year value plus inflationary adjustments, also known as the factored base year value (FBYV). In cases where the original owner has died, the date of death is used as the transfer date, allowing for a step-up basis for income tax purposes.
There is no requirement for a home on the farm or for the transferee to live there to qualify. Family farms are considered real property used for cultivation, pasture, grazing, or producing any agricultural commodity under Government Code 51201.
The exclusion has limits based on each legal parcel’s value. The amount excluded is equal to the property’s taxable FBYV at transfer plus $1 million, with this threshold adjusted every two years by an inflation factor calculated by the State Board of Equalization. For transfers between February 16, 2021 and February 15, 2023, this amount was $1 million; from February 16, 2023 through February 15, 2025 it was $1,022,600; and from February 16, 2025 through February 15, 2027 it will be $1,044,586. If market value exceeds these limits at transfer time, any excess is added to taxable value. More details are available in this summary document: https://boe.ca.gov/pdf/pub801.pdf.
To apply for this exclusion when transferring between parents and children after February 16, 2021 submit form BOE-19-P to your County Assessor within three years of transfer or before selling to another party.
Transfers between grandparents and grandchildren are also eligible under limited circumstances if both parents of the grandchild (who were children of the grandparents) are deceased. The same conditions apply as with parent-child transfers. Applicants should use form BOE-19-G with their County Assessor.
Factored Base Year Values remain separate from Williamson Act values but may help farmers avoid increases in homesite and non-living improvement values or where FBYV is lower than Williamson Act values.
For more information about these exclusions and additional resources such as Letter to Assessors No. 2022/012 and related materials on Proposition 19 visit its official webpage or call local offices at (559)600-6879.
