Understanding San Francisco’s Transfer Tax: A Quick Guide

What are the types of transfer taxes?

Transfer taxes are sometimes referred to by different names: documentary stamp tax, deed tax, and recordation tax are some examples. Ultimately, these amount to the same thing.

In California, the transfer tax you pay as a seller will depend on where you live. Here’s a look at how it works in San Francisco.

State transfer taxes

If you are selling a property in San Francisco, you are on the hook for the Golden State’s transfer tax, levied at a rate of $0.55 per every $500 of the home’s value. You will also be responsible for San Francisco-specific taxes as well.

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?

While transfer taxes themselves aren’t deductible on your tax return, there’s a potential silver lining for homeowners.

Capital gains taxes apply to profits made from selling a property, and transfer taxes count as part of the selling costs according to the IRS Transfer taxes as selling costs. This means you can subtract them from your home’s closing sale price, potentially reducing the amount of capital gains tax you owe capital gains. In essence, you’re decreasing your taxable profit.

Transfer tax exemptions

San Francisco offers transfer tax exemptions for the following property transfers:

• Transfers between spouses or domestic partners
• Gifts of property
• Inherited property
• Transfers involving refinancing, where no consideration is paid (e.g., adding or removing a co-signor/co-owner)
• Transfers between an individual and their own trust
• Transfers between an individual and their own LLC, LLP, or corporation

Estimating transfer taxes for your home sale

Here are some resources to help you estimate how much you might owe in transfer taxes:

• HomeLight’s Net Proceeds Calculator: This handy tool provides a quick estimate of your potential profit after factoring in closing costs, including transfer taxes, agent fees, and any renovations.
• Consult a Top Real Estate Agent: An experienced agent can provide a more detailed breakdown of your transfer tax liability, factoring in the specific sale price and current market conditions.

Transfer taxes are just one of the closing costs of selling a home. A skilled real estate agent can help you manage these costs and better understand your financial picture from the outset. Discussing transfer taxes with your agent early on will help you make informed decisions before closing the deal.

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