On Nov. 3, 2020, California voters approved Proposition 19, providing for intergenerational exclusions and base year value transfers of family farms that can result in property tax savings for farmers.  Information on this exclusion can be found at https://boe.ca.gov/pdf/pub801.pdf and is summarized below.

Beginning Feb. 16, 2021, the law allows transfers of a family farm between parents and their children without causing a change in ownership for property tax purposes. The transfer qualifies as an exclusion from change in ownership and allows transferee to retain the taxable value of the transferor.

“Taxable value” means the base year value plus inflationary adjustments, commonly referred to as the factored base year value (FBYV). Please note that in cases where the transferor died, the date of death is considered the date of transfer when the transferee can also get the step-up basis for income tax purposes.

There is no requirement that the family farm contain a home that the transferee lives in to qualify. A family farm is defined as real property under cultivation, or which is being used for pasture or grazing, or that is used to produce any agricultural commodity as defined in Government Code 51201.

There is a limit to the value that can be excluded for each legal parcel of a family farm. The value limit is equal to the property’s taxable value FBYV at time of transfer plus $1 million, as adjusted every other year by an inflation factor. The State Board of Equalization calculated this adjustment and publishes the amount that the $1 million is adjusted to. For transfer or change in ownership dates from Feb. 16, 2021, through Feb. 15, 2023, the amount is $1 million. From Feb. 16, 2023, through Feb. 15, 2025, the adjusted amount is $1,022,600 and from February 16, 2025, through February 15, 2027, the adjusted amount is $1,044,586. If the market value exceeds this limit, the difference is added to taxable value.

How to apply

Submit form BOE-19-P, Claim for Reassessment Exclusion for Transfer Between Parent and Child Occurring on or After Feb. 16, 2021, to the County Assessor where the property is located. Application must be filed within three years of the transfer date, but before transferring the property to a third party.

For additional information on this exclusion, refer to: Letter to Assessors No. 2022/012 and other LTAs listed on the Proposition 19 webpage or call our office at 559-600-6879.

For Transfers Between Grandparents and Grandchildren-Operative Feb. 16, 2021

Allows transfers of a family farm between grandchildren and their grandchildren under limited conditions without causing a change in ownership for property tax purposes. It is an exclusion from change in ownership. The same conditions and requirements apply as the exclusion for transfers between parents and children, except to qualify, the parents of the grandchild, who qualify as children of the grandparents, must be deceased.

How to apply

Submit form BOE-19-G, Claim for Reassessment Exclusion for Transfer Between Grandparents and Grandchild occurring After Feb. 16, 2021, to your County Assessor where the property is located.

Please note that Factored Base Year Values are separate from any Williamson Act values.  This exclusion may still benefit farmers enrolled in the Williamson Act as it may prevent an increase in homesite and non-living improvement values. It also may prevent an increase for those farmers for whom the FBYV is lower than Williamson Act values.

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Paul Dictos, CPA, is the Fresno County assessor-recorder