Californians to Vote on Local Transfer Tax Issues
Update (Nov. 7, 2018): Voters in five of the six cities mentioned in this story decided to approve increases in transfer taxes by wide margins. Hayward (58-42), Oakland (67-33), Richmond (64-36), Berkeley (71-29) and El Cerrito (54-46) all approved tax hikes. Only Union City (45-55) voted against a transfer tax increase. Stand by for more updates on what this might mean for your East Bay community. Sign up for updates.
Six cities on the East Bay have measures on the November 6 ballot that would increase transfer taxes when properties are sold in an effort to better balance city budgets.
In almost all cities in California, the only tax is that which is levied by the counties, but some cities do charge an additional tax with Bay Area cities like Oakland and Berkeley already having the highest transfer tax rates in the state.
State law requires property owners to pay a county transfer tax of $1.10 for every $1,000 of sale price. Counties usually split that tax with the cities. However, cities with their own home rule charters that are independent of the state can increase transfer taxes if voters approve.
The cost of housing in California, specifically on the East Bay is already prohibitive for a lot of middle-income families. Increasing the cost of transfer taxes for homes in cities like Hayward, Richmond, Oakland, Berkeley and Union City would make homes in the region less affordable.
While these taxes are typically split between buyers and sellers, the new tax increases would cost homeowners and homebuyers thousands of dollars more to buy or sell a home.
Currently, most cities in California pay a transfer tax of $275 on a $250,000 property, $825 on a $750,000 property, $1,375 on a $1,250,000 property, $1,925 on a $1,750,000 property and $2,475 on a $2,250,000 property.
According to data compiled by the San Jose Mercury News the following cities would see the biggest jumps in transfer taxes:
- Hayward (Measure T) would see a $1,000 increase on a home valued at $250,000; a $3,000 increase on a home valued at $750,000; a $5,000 increase on a home valued at $1,250,000; a $7,000 increase on a home valued at $1,750,000; and a $9,000 increase on a home valued at $2,250,000.
- Richmond (Measure H) would have an increase of $6,875 on a home valued at $1,250,000; A spike of $9,625 on a home valued at $1,750,000 and a jump of $12,375 on a home valued at $2,225,000.
- Oakland (Measure X) would see an increase by $5,625 for a home valued at $2,225,000. That would make the transfer tax on a property of that value $41,850, or nearly 17 times that of most every other city in California.
- Berkeley (Measure P) would see an increase of $17,500 for a home valued at $1,750,000 and a jump of $22,500 for a home valued at $2,225,000, bringing their new taxes to nearly 24 times that of mostly every other city in California on properties of those values.
- Union City (Measure EE) would be adding a city tax for the first time and increasing the current taxes by $2,500 on a $250,000 home; $7,500 on a $750,000 home; $12,500 on a $1,250,000 home; $17,500 on a $1,750,000 home and $22,500 on a $2,225,000 home.
All of this data means people looking to buy homes in these cities would have to borrow even more money to finance the purchase of their home. As for sellers, they get the tax deducted from their equity, which is less money available for their next down payment.
Homeowners in California have already born the burden of taxes for the cities with growing property taxes and levies for infrastructure needs, combatting homelessness and subsidizing pensions for public employees.
Additionally, if any of these measures pass, these taxes would be on top of the county tax, which would still exist by state law regardless of the individual city’s charter.
Here is a break down of each of the aforementioned Measures and how they will directly affect each city:
Hayward (Measure T): The tax rate would increase from 0.56 percent to 0.96 percent.
Richmond (Measure H): The tax rate would jump from 0.81 percent to 1.36 percent for properties between $1 million and $3 million; to 2.61 percent for properties between $3 million and $10 million; and 3.11 percent for properties over $10 million.
Oakland (Measure X): This is the only measure that includes a reduction at some levels. Measure X would reduce the transfer tax rate from the current 1.61 percent to 1.11 percent for properties less than $300,000. It would remain at the current rate for properties between $300,000 and $2 million and increase to 1.86 percent for properties between $2 million and $5 million and 2.61 percent for properties over $5million.
Berkeley (Measure P): This measure would raise the current tax rate of 1.61 percent to 2.61 percent for all properties valued at $1.5 million or higher. This increase would last 10 years. The city has said this new tax revenue would be used to tackle homelessness and mental health issues, however the money would be ticketed for the city’s general fund, which is designed for any purpose the city needs.
Union City (Measure EE): This measure would make Union City a charter city and permanently increase their transfer tax rate from 0.11 percent to 1.11 percent on all properties regardless of value.