Understanding Santa Monica’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 selling a home in Santa Monica, it’s important to know how transfer taxes might impact your bottom line. A real estate transfer tax is a fee charged by the state, county, or city when property ownership changes hands. These taxes are typically calculated as a percentage of the sale price and can vary widely depending on your location.
In Santa Monica, sellers are responsible for paying city, county, and state transfer taxes, which can add up quickly without proper planning. In this guide, we’ll break down how transfer taxes work in Santa Monica, who typically pays them, and what you might expect to owe when selling your property.
We’ll also cover key exemptions, how to estimate your transfer tax costs, and whether these taxes are deductible.
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What are transfer taxes?
Real estate transfer taxes are charges imposed by a government entity when a property’s ownership changes hands. According to the Federal Trade Commission, these taxes are typically applied at the state or local level when a property’s title is officially transferred from seller to buyer. The title is the legal documentation that proves ownership, and moving it from one person to another usually comes with a cost.
The exact amount you’ll pay depends on where the property is located, as each jurisdiction, state, county, and city can set its tax rates and rules. Like other taxes, transfer taxes are a way for governments to generate revenue that supports public services and infrastructure.
Who pays for transfer taxes?
The responsibility of transfer taxes depends on the state, city, or county where the transaction is taking place. In Santa Monica, like in all Los Angeles counties, transfer taxes are the responsibility of the seller.
What are the types of transfer taxes?
Transfer taxes will typically vary based on local guidelines but can generally be divided into three categories: state, city, and county, depending on the state. Here’s a quick look at how it works in Santa Monica.
State transfer taxes
California has a one-size-fits-all approach to transfer taxes for home sales. The Golden State levies a transfer tax of $1.10 per $1,000 (or $0.55 per $500) of the home’s value. So, for a $400,000 home sale in Santa Monica, the seller would pay a state transfer tax of $440. This tax rate is consistent across all California home transactions, unless there are exemptions.
County transfer taxes
In Los Angeles County, the base transfer tax rate is $0.55 per $500 of the home’s value. This applies to home sales over $100 in value, which will apply to most transactions.
However, depending on the city in Los Angeles County, there might be an additional transfer tax, as is the case with Santa Monica.
City transfer taxes
After March 1, 2023, following a voter-approved ordinance, another transfer tax tier was added to Santa Monica’s tier of transfer taxes.
The first tier, at $3.00 per $1,000 value, applies to transactions under $5 million and remains unchanged from the previous system. Additionally, the second tier, levied at $6.00 per $1,000, for transactions between $5 million and under $8 million, is also unchanged.
The new third is levied at a rate of $56 per $1,000 of the property’s value, and applies to transactions of $8 million or more.
Example of a property transfer valued at $8 million (on or after March 1, 2023):
| County | $8,800 |
| City of Santa Monica | $448,000 |
| Total | $456,800 |
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?
While you can’t deduct transfer taxes on your income tax return, they may still offer some financial relief when it comes to capital gains. Capital gains refer to the profit you make from selling your home, which can be subject to federal taxes, much like the sale of other investments or assets.
The good news is that the IRS allows home sellers to treat transfer taxes as selling costs. This means you can add the amount you paid in transfer taxes to your total selling expenses and subtract that from your home’s sale price when calculating your profit. By reducing the taxable gain from your sale, you may be able to lower the amount you owe in capital gains taxes. This can help offset some of the cost of transfer taxes, even if they aren’t directly deductible.
Transfer tax exemptions
In some cases, sellers in Santa Monica may qualify for exemptions from certain transfer taxes, depending on the type of property transfer. These exemptions are often tied to state laws, county guidelines, or local ordinances.
For example, affordable housing transfers, such as those involving nonprofit organizations or community land trusts, may be exempt from the city’s Second and Third Tier transfer taxes. These entities can apply for a certification from the Director of Finance or request a refund within 120 days of the transfer.
Additional exemptions in Los Angeles County include:
- Transfers confirming title in the grantee
- Transfers related to divorce proceedings
- Transfers securing or reconveying a debt
- Transfers involving living trusts
- Court-ordered transfers not involving a sale
- Transfers between spouses or to confirm community property interests
- Transfers of easements or leases valued under $100
- Transfers where liens equal or exceed the property’s value
- Transfers between the same parties, maintaining the same ownership proportions
Estimating transfer taxes for your home sale
To get a clearer idea of how much you’ll walk away with after selling your Santa Monica home, try HomeLight’s Net Proceeds Calculator. This tool quickly estimates your potential profit by factoring in key expenses like transfer taxes, agent commissions, and other closing costs. It’s a helpful way to see the bigger financial picture before listing your property.
For a more detailed breakdown of your expected transfer taxes and other fees, it’s wise to consult with a top real estate agent. An experienced agent can explain how these costs work in your local market and, depending on the situation, may even help negotiate who covers certain fees.
Editor’s note: This post is for educational purposes only and does not constitute legal or financial advice. Links and mentions of Santa Monica area tax services or attorneys should not be considered endorsements.
Header Image Source: (Max Kukurudziak / Unsplash)
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