What Is Transfer Tax in California and Who Pays It?

Transfer tax in California is a one-time charge collected when a deed changes hands and gets recorded with the county. The county’s base rate is $1.10 for every $1,000 of the property’s value, and many cities add their own tax on top, pushing the total far higher in places like San Francisco, Oakland, and Los Angeles. Which party writes the check depends on local custom and what the purchase agreement says.

What the County Charges

Under California’s Documentary Transfer Tax Act, each county’s board of supervisors may tax every recorded deed transferring real property. The standard rate is $0.55 per $500 of value, which comes out to $1.10 per $1,000.1California Legislative Information. California Code RTC – Section 11911 The tax only kicks in when the property’s value, after subtracting any existing liens the buyer takes over, exceeds $100.2San Mateo County Assessor-County Clerk-Recorder & Elections. Documentary Transfer Tax

Value is rounded up to the next $500 increment before the rate is applied. A home valued at $750,000 produces a county tax of $825. A property valued at $421,200 rounds up to $421,500, producing a county tax of $463.65.3Los Angeles County RR/CC. General Info

City Taxes Stacked On Top

The county figure is just the floor. Court decisions in the early 1990s confirmed that California’s charter cities can adopt their own transfer tax, and as of early 2025, 26 charter cities had done so. When a charter city imposes its own rate, the county still collects its full $0.55 per $500, and the city collects everything above that from its separate rate.4Legislative Analyst’s Office. Local Taxes – Section: Charter City-Only Transfer Taxes The result is that total transfer tax costs vary enormously by location, and several large cities use tiered structures that climb steeply with property value.

San Francisco

San Francisco is both a charter city and a county, so its rates replace the standard county levy entirely. The tiers are:

  • Up to $250,000: $2.50 per $500 (0.50%)
  • $250,001–$999,999: $3.40 per $500 (0.68%)
  • $1,000,000–$4,999,999: $3.75 per $500 (0.75%)
  • $5,000,000–$9,999,999: $11.25 per $500 (2.25%)
  • $10,000,000–$24,999,999: $27.50 per $500 (5.50%)
  • $25,000,000 and above: $30.00 per $500 (6.00%)

A $2 million home in San Francisco owes $15,000 in transfer tax. The same home in an unincorporated county area with no city tax owes only $2,200.5SF.gov. Transfer Tax

Oakland

Oakland’s tiered system, in effect since January 2019, applies these rates to the full transfer amount:

  • $300,000 or less: 1.00%
  • $300,001–$2,000,000: 1.50%
  • $2,000,001–$5,000,000: 1.75%
  • Over $5,000,000: 2.50%

Oakland offers a 0.5% discount for low-to-moderate-income first-time homebuyers on the first two tiers.6City of Oakland, CA. Real Estate Transfer Tax

Los Angeles

Los Angeles layers a base city rate of $2.25 per $500 (0.45%) on all transfers, plus an additional tax under Measure ULA on higher-value sales. For transactions closing after June 30, 2025, the ULA thresholds are:

  • Over $5,300,000 but under $10,600,000: 4% ULA rate, for a combined 4.45%
  • $10,600,000 or more: 5.5% ULA rate, for a combined 5.95%

One quirk: the base city tax is calculated on the net value after subtracting existing liens, while the ULA tax applies to the gross value including liens.7Los Angeles Office of Finance. Real Property Transfer Tax and Measure ULA FAQ

How Liens Reduce the Taxable Amount

The county transfer tax is not always calculated on the full sale price. The Revenue and Taxation Code defines the taxable amount as the property’s value “exclusive of the value of any lien or encumbrance remaining thereon at the time of sale.”8California Legislative Information. Revenue and Taxation Code – RTC Chapter 2 Authorization for Tax If the buyer takes over the seller’s existing mortgage rather than paying it off, only the portion of value above that mortgage balance is taxed.

Say a property sells for $800,000 and the buyer assumes the seller’s $300,000 mortgage. The county transfer tax applies to the $500,000 difference, not the full price. When a property is liened to full value, meaning the debt equals or exceeds the property’s worth, the transfer is effectively exempt from the county tax because nothing taxable is left. Some municipal taxes work differently. Los Angeles’s Measure ULA, for instance, uses gross value and does not allow this deduction.

Who Pays the Tax

California law does not dictate which side pays. Local custom usually fills the gap: sellers typically cover it in Northern California, while buyers more often handle it in Southern California. These are conventions, not rules, and the purchase agreement can assign the cost to either party.9City of St. Helena. Charter City and Real Property Transfer Tax Measures Frequently Asked Questions

Negotiating leverage matters. A buyer competing for a desirable property might offer to absorb the transfer tax to sweeten the deal, and a seller in a slow market might volunteer to pay it as a concession. The County Recorder does not care who pays, but the tax must clear before the deed will record. If the designated party fails to pay, the other side usually ends up covering it to keep the transaction from collapsing. In commercial deals, allocation tends to be spelled out explicitly up front.

Common Exemptions

Not every transfer triggers a tax bill. The Revenue and Taxation Code carves out several categories that homeowners and families run into most often:

  • Gifts and inheritance. Property transferred as a gift, where nothing of value is exchanged, or passed at the owner’s death is exempt.10California Legislative Information. California Code RTC – Section 11930
  • Divorce or legal separation. Transfers dividing community property between spouses or registered domestic partners under a dissolution judgment or settlement agreement are exempt, provided the deed includes a signed statement noting the exemption.11California Legislative Information. California Revenue and Taxation Code Section 11927
  • Revocable living trusts. Transfers into or out of a revocable trust where the person transferring is also the trust’s beneficiary are exempt. This is the most common estate planning move and generates no tax.
  • Changes in how title is held. If the transfer only changes the form of ownership without changing anyone’s proportional interest, such as moving a property from joint tenancy into community property, or into an LLC the owner wholly controls, no tax is owed.
  • Government acquisitions. When a federal, state, or local agency takes title, the transfer is exempt.12California Legislative Information. California Code RTC – Section 11922

Some charter city transfer taxes keep their own exemption lists that may not mirror the state’s. If a municipal tax applies to your transaction, check with that city’s finance office before assuming an exemption carries over.

Entity Ownership Transfers

Selling a business entity that owns real property does not automatically dodge the tax. California treats a change in ownership as having occurred whenever cumulative transfers of interests in a corporation or LLC exceed 50 percent. The timing does not matter. Once that threshold is crossed, whether all at once or over years, the transfer tax is triggered on the underlying real property.13California State Board of Equalization. Rule 462.180 – Change in Ownership Transfers of Interest in Legal Entities

County recorders pursue these actively. Los Angeles County cross-references assessor records to catch entity transfers where no deed was recorded but a controlling interest changed hands, then sends notices demanding the tax.14Los Angeles County Registrar-Recorder/County Clerk. Legal Entity/Corporate Documentary Transfer Tax Collections Structuring a sale to keep individual stakes at or below 50 percent can avoid the trigger, but it takes careful legal planning.

Paying at Closing and Reporting on Your Taxes

The transfer tax is collected through normal escrow. The escrow agent calculates what is owed at both the county and city levels, lists it as a separate line on the closing statement, and collects from whichever party the purchase agreement designates. When the deed goes to the County Recorder, the escrow company remits the tax at the same time. The Recorder will not record the deed without payment. In a city with a tiered municipal tax, the math can get complicated enough that double-checking the escrow company’s figures against the city’s published rate schedule is worth the time.

Transfer tax is not deductible as a standalone item on a federal return. The IRS does allow buyers to add transfer tax paid to the property’s cost basis under Publication 551, which treats it as a settlement cost includible in basis.15IRS. Publication 551 (12/2025), Basis of Assets A higher basis means a smaller taxable gain whenever the property is sold later. For sellers, the transfer tax they pay counts as a cost of sale, reducing reported gain. The tax does not disappear from the tax picture; it shifts into the capital gains calculation. On a high-value property in San Francisco or Los Angeles, where combined transfer tax can run into five or six figures, keeping accurate records of what was paid is worth the effort.