Understanding San Jose’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.
If you’re preparing to sell a home in the city of San Jose, it’s important to understand how transfer taxes could affect your bottom line. Real estate transfer taxes are fees charged by state, county, or local governments when property ownership changes hands. These taxes are typically calculated based on the home’s final sale price and are paid at closing.
In San Jose, sellers may be responsible for multiple layers of transfer taxes, including city, county, and state charges.
This guide explains how real estate transfer taxes work in San Jose, who usually pays them, and what exemptions may apply. It also covers how to estimate your total costs and where to get expert help if you need it.
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.
What are transfer taxes?
Real estate transfer taxes are fees imposed by a government entity when the ownership of a property changes hands. According to the Federal Trade Commission, these taxes are typically required at the time a property’s title is officially transferred from the seller to the buyer. The amount owed usually depends on the property’s sale price and the tax rates set by the applicable jurisdiction.
These taxes serve a fiscal purpose for governments at various levels. Depending on where the property is located, a seller or buyer may need to pay state, county, or city transfer taxes, or a combination of the three. These fees help generate revenue for local services and infrastructure, much like property taxes or recording fees.
Who pays for transfer taxes?
Transfer taxes in the city of San Jose, as in all of Santa Clara County, are split between the buyer and 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 Jose:
State transfer taxes
In California, statewide, the state’s transfer tax is levied at a rate of $0.55 per $500 of home value.
County transfer taxes – Santa Clara County
Property transfers located within Santa Clara County, specifically San Jose, Palo Alto, and Mountain View, are taxed at a rate of $1.65 per $500 or fractional portion of real property value. This is in addition to any state and city-specific transfer taxes.
City transfer taxes
In addition to the $1.65 per $500 tax rate, an ordinance effective as of 2020 requires property transferred in San Jose for a consideration of $2 million or more to be subject to additional transfer taxes.
| Value of consideration | Rate |
| $2,000,000 to $5,000,000 | 0.75% |
| $5,000,000.01 to $10,000,000 | 1% |
| Over $10,000,000 | 1.5% |
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 you understand some of the finer points of the process and give you a better idea of what to expect.
Are transfer taxes deductible?
Transfer taxes are not deductible on your income tax return, but they may still provide some tax advantages when selling your home. While you can’t write them off as a direct deduction, you might be able to reduce your capital gains tax liability. Capital gains refer to the profit made from selling a home or other assets, and they are subject to federal taxation.
The IRS allows sellers to classify transfer taxes as selling costs, meaning they can be deducted from the home’s final sale price when calculating capital gains. Reducing the reported profit from the sale could lower the amount of capital gains tax owed. Homeowners planning to sell should consult a tax professional to understand how this applies to their specific situation.
Transfer tax exemptions
Some sellers in San Jose 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 estimate your transfer taxes and overall net proceeds from selling your San Jose home, try HomeLight’s Net Proceeds Calculator. This tool factors in key selling costs, including transfer taxes, agent commissions, and potential repairs, helping you get a clearer picture of your final earnings.
For a more precise breakdown of your closing costs, working with a top real estate agent is a smart move. An experienced agent can explain local tax rates and help determine if any costs, including transfer taxes, are negotiable based on market conditions.
Editor’s note: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of San Jose area tax services or attorneys should not be considered endorsements.
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