Guide to the California Real Estate Transfer Tax

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In California, real estate transfer tax is a fee levied during the sale of a property. It is calculated based on the property’s value with additional municipal fees sometimes applied. Whether sellers cover transfer tax in California often depends on local customs. Many counties expect the seller to pay, while others shift the responsibility to buyers or allow negotiation between parties. This tax can vary by city and county, making it a localized factor in property transactions.

Talk to a financial advisor to find out how California real estate transfer tax affects the sale or purchase of your property.

The California real estate transfer tax is a fee assessed when ownership of real property is transferred between parties. It is typically imposed at the county level, with a standard rate of $1.10 for every $1,000 of property value (rounded to the nearest $500).

This tax is separate from other fees, such as recording taxes or property taxes, and is calculated based on the property's total value. In addition to the county transfer tax, some cities within California have their own municipal transfer taxes, which are charged on top of the county fee. For instance, cities like San Francisco, Los Angeles and Oakland implement higher or tiered transfer tax rates based on the property's sale price. These local rates can significantly increase the overall cost of transferring property, particularly in high-value markets.

The revenue generated from these taxes is typically allocated to public services and infrastructure, making them a vital funding source for local governments. However, the specific application of transfer taxes and any exemptions – such as for certain family transfers or foreclosures – can vary widely depending on the city and county. This layered taxation system highlights the complexity of California’s real estate transactions, requiring buyers and sellers to understand local regulations.

Sellers do cover transfer tax in California in many cases, but this can vary depending on local customs and the terms negotiated in the purchase agreement. In most counties, it is customary for sellers to cover the cost of the county transfer tax as part of their closing costs.

For cities with separate municipal transfer taxes, the default expectation is often seller payment unless otherwise agreed upon. In competitive real estate markets, buyers may offer to cover the transfer tax as a way to strengthen their bid. Conversely, in slower markets, sellers may negotiate for buyers to take on the cost.