Understanding San Diego’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
Selling your home in San Diego? You’ll want to understand transfer taxes—fees paid when property ownership changes hands. These taxes are based on your home’s sale price and can add up quickly.
In this short guide, we’ll explain how transfer taxes work in San Diego and what you can expect to pay. We’ll cover who pays these taxes, the types you might encounter, and specific costs at the state, county, and city levels.
Plus, we’ll touch on other related fees, potential deductions, exemptions, and how to estimate your total transfer tax bill.
Connect with a Top Agent to Help Maximize Value
Even rockstar agents can’t make your tax liability disappear, but HomeLight data shows that the top 5% of agents across the U.S. help clients sell their home for as much as 10% more than the average real estate agent, helping offset the tax bill.
Disclaimer: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of San Diego area tax services or attorneys should not be considered endorsements.
What are transfer taxes?
Real estate transfer taxes, as defined by the Federal Trade Commission, are taxes paid when property ownership changes hands. When you sell your home and transfer the title to the new owner, the government charges a fee.
The amount you owe depends on your property’s location, and there are different rules at the state, county, and city levels. These taxes help generate revenue for local and state governments.
Who pays for transfer taxes?
Different states, cities, or municipalities differ on who is responsible for paying transfer taxes. In San Diego, the total amount levied is split between the buyer and the seller. It’s important to keep this in mind and have a good idea of what you will owe before the sale is finalized. In San Diego, the seller is also responsible for a title fee.
In other parts of California, these fees can fall solely to the seller.
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be broken down into three categories — state, city, and county, depending on the state. Here’s a quick look at how it works in San Diego.
State transfer taxes
In California, statewide, the state’s transfer tax is levied at a rate of $0.55 per every $500 of home value.
County transfer taxes
Counties in California can also leverage taxes on title transfers. However, unlike state transfer taxes, county transfer tax rates vary across the state.
In San Diego, the tax is levied at a rate of $1.10 per thousand of the total transaction price.
Other transfer fees
In addition to transfer taxes, there are possible fees to consider, such as from a homeowner’s association or another local neighborhood organization. Again, as these can vary heavily based on location, it’s important to consult a professional.
If you’re selling your home for sale by owner, consulting a professional might help with some of the finer points of the process and give you a better idea of what you can expect.
Are transfer taxes deductible?
Transfer taxes are not deductible on your income tax return. However, you can reduce the amount you owe in capital gains taxes. Capital gains are the profits made from selling your home and are subject to federal tax, similar to other asset sales.
According to the IRS, you can treat paid transfer taxes as selling costs. This means you can subtract these costs from your home’s selling price, reducing the capital gains tax on your profit. By including transfer taxes in your selling expenses, you can potentially lower the overall taxes owed from your home sale.
Transfer tax exemptions
Some sellers in San Diego might be eligible for transfer tax exemptions based on specific conditions. Here are some common exemptions:
- Gifts: Transferring property as a gift with no payment.
- Name changes: Confirming a change of name on the title.
- Spousal transfers: Establishing separate property of a spouse or changing how the title is held.
- Government conveyances: Transfers to or from governmental agencies or nonprofit corporations.
- Debt-related transfers: Conveyances to secure a debt or reconveyance after debt satisfaction.
- Court-ordered transfers: Including those under a reorganization plan or by order of the SEC.
- Partnership adjustments: Confirming dissolution of a partnership or changes in partnership interest.
- Foreclosure alternatives: Deed in lieu of foreclosure or conveyances during marriage dissolution.
Estimating transfer taxes for your home sale
To get a quick estimate of your net proceeds from selling your San Diego home, try HomeLight’s Net Proceeds Calculator. This tool factors in closing costs, including transfer taxes, agent fees, and renovations, giving you a clear financial picture.
For a more accurate assessment of your transfer taxes and other closing costs, consulting a top real estate agent is a smart move. These expenses can sometimes be negotiated depending on the market situation.
Header Image Source: (Alyssa Best/ Unsplash)
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