The best answer to this question is: it depends on what type of property they are buying. San Francisco’s real estate transfer tax is a City and County tax on the sale or transfer of real estate. When a home buyer is purchasing a single family home, a Tenancy in Common (TIC), or a re-sale condo or loft, the seller customarily pays the transfer tax.
However, when buyers purchase a newly constructed property — usually a condo — in San Francisco, they customarily pay the transfer tax instead of the seller. In new construction real estate transactions in San Francisco, the developers push this cost to the buyers. So at closing as a new construction home buyer, you will be responsible for title and escrow fees, loan and lending fees if you are financing your purchase, and also transfer tax.
So, yes, the transfer tax is an added cost to buyers of new construction condos in San Francisco. The flip side of the new construction coin is that new construction almost always sells at the listing price. Anyone who has looked for a home or followed the San Francisco real estate market is familiar with the intense competition, crazy overbids, and sales prices seen in the resale market. With new construction, buyers can avoid a multiple offer situation where they will be paying over asking price for their new condo. After all, if a developer has two parties interested in the same home, it’s more beneficial to direct one set of buyers to a similar unit and sell two homes, instead of trying to squeeze an overbid out of just one.
The transfer tax rate is variable, depending on the purchase price, as shown in the chart below.
|If entire value or consideration is …||Tax rate for entire value or consideration is …|
|More than $100 but less than or equal to $250,000||$2.50 for each $500 or portion thereof|
|More than $250,000 but less than $1,000,000||$3.40 for each $500 or portion thereof|
|$1,000,000 or more but less than $5,000,000||$3.75 for each $500 or portion thereof|
|$5,000,000 or more but less than $10,000,000||$11.25 for each $500 or portion thereof|
|$10,000,000 or more but less than $25,000,000||$13.75 for each $500 or portion thereof|
|$25,000,000 or more||$15.00 for each $500 or portion thereof|
Do These Common Types of Transfers Cause a Transfer Tax?
- Between a married couple? No
- Between domestic partners? No
- Gifts? No
- Inheritance? No
- Add or remove co-signor or co-owner for refinancing purposes? Yes
- Between parent(s) and child(ren)? Yes
- Individual(s) to/from his/her own trust? No
- Individual(s) to his/her own Limited Liability Company or Limited Partnership or Corporation? No