The grandparent to grandchild exclusion (known as Proposition 193), allows certain transfers from grandparents to grandchildren to be excluded from reappraisal. It only applies to real property transfers that have occurred since March 27, 1996 when certain requirements are met and the complete application is filed.
The grandparent to grandchild exclusion is an extension of the parent-child exclusion to be used in situations where the parent of the grandchild has predeceased the grandparent. This exclusion only applies to transfers from grandparent to grandchild (one direction).
The following types of real property transfers may be excluded:
- Transfers of primary residences (no limit)
- Transfers of the first $1 million of real property other than the primary residences.
The exclusion applies only to real property transfers between eligible grandparent and grandchildren, not legal entities. In order to qualify, all the parents of the grandchild must be deceased as of the date of purchase or transfer. Parents are those persons who qualify under section 63.1 as the children of grandparents. However, for transfers that occur on or after January 1, 2006, a son-in-law or daughter-in-law of the grandparent that is a stepparent to the grandchild need not be deceased in the meeting the condition that "all of the parents" of the grandchild must be deceased. The grandparent to grandchild exclusion does not apply when a parent disclaims their interest.