City and County Transfer Tax in the Bay Area (Real Estate Transfer Taxes)
As you begin to think about buying or selling a home, you may find yourself wondering what costs are involved with either side of the transaction. You guessed it. Real Estate Transfer Taxes. Per the National Association of Realtors, these taxes are “imposed on the transfer of title of real property.”
What does that mean? That means when the title of your home is transferred to another party (i.e. your home is sold), the government charges a tax on that transaction. Depending on where the property being sold is located, transfer taxes will need to be paid to the state, county, and/or city.
Who pays these taxes? Like everything in a real estate transaction, things are negotiable. With that said, there are customary practices per county and per city as to who typically foots the bill. It is best to partner with a local Realtor who has expertise and knowledge to help their clients navigate and understand these potential costs.
While Real Estate Transfer Taxes are just a couple of things to expect when it comes to closing costs. Check out the rest of potential closing costs here!
Take a look below for a brief guide as per Chicago Title and Old Republic Title transfer tax guides:
This information is great but how do I calculate my potential transfer tax? In Alameda, Contra Costa, and Solano Counties, the transfer tax is $1.10 per Thousand Dollars of the sale price. Remember the $1.10 per $1,000. Now, let’s use an example based on the charts above. Let’s say a house is purchased in Walnut Creek, CA (located in Contra Costa County) for $1,500,000. Looking at Old Republic Title’s chart, Walnut Creek is not specifically listed as a city with a transfer tax. In this case, the transfer tax would be sales price in thousands x $1.10 or 1,500 x $1.10 = $1,650. This transfer tax is typically paid for by the seller.
Let’s do another example. Say a house is purchased in Berkeley for $1,600,000. The city transfer tax is $15 per Thousand Dollars. In this case, the Documentary Transfer Tax (County Tax) would be 1,600 x $1.10 = $1,760. The city transfer would be 1,600 x $15.00 = $24,000. The Documentary Transfer Tax (or County Tax) is typically paid for by the seller and the City Transfer tax is split 50/50 between buyer and seller. In this example, the seller would pay $1,760 + ($24,000 / 2) = $13,760. The buyer would pay $24,000 / 2 = $12,000.
This last example is a unique example and one that still blows my mind every time I run the calculations. Say another house is purchased in Berkeley for $1,600,001. In this case, the Documentary Transfer Tax (County Tax) would be 1,601 x $1.10 = $1,760.55. The city transfer would be 1,601 x $25.00 = $40,000.03. In Berkeley and certain cities in the Bay Area, the city transfer tax changes based on the price range of the home. You may think it would be prorated based on the differential dollar amount in the next bracket, however that is not the case. In the case where a house is purchased for just $1 above $1,600,000 in Berkeley, the difference in city transfer tax is $40,000.03 compared to $24,000 or $25 compared to $15 per $1,000. Crazy right!?
