When buying or selling a home in San Francisco, you’ll encounter the property transfer tax. This fee is usually paid by the seller when ownership changes hands. In this guide, we explain who pays the tax, how it’s calculated, current rates, exemptions, recent changes, and its impact on the real estate market.
Who Pays the Property Transfer Tax in San Francisco?
In San Francisco, the seller typically pays the property transfer tax. This happens when you sell your home and record the deed that transfers ownership to the buyer. The tax is part of the seller’s closing costs. In some cases, buyers and sellers might negotiate to share this cost, but this is rare in San Francisco.
For example, if you sell a home for $1,000,000, you, as the seller, pay the transfer tax based on that amount. Buyers don’t pay this tax directly, but it can influence the sale price they offer.
How is the Property Transfer Tax Calculated?
The property transfer tax is based on the sale price or fair market value if no sale occurs, like in a gift. San Francisco uses a tiered system, where the tax rate depends on the property’s value. The tax is calculated per $500 (or portion thereof) of the property’s value.
California also charges a state transfer tax of $0.55 per $500 of the property’s value, which is usually paid by the seller in San Francisco.
Example Calculation
If you sell a property for $1,000,000, here’s how the tax is calculated:
- City Transfer Tax:
- The property is in the $1,000,000 to $4,999,999 range, with a rate of $3.75 per $500.
- Divide $1,000,000 by 500 = 2,000 units of $500.
- City tax = 2,000 × $3.75 = $7,500.
- State Transfer Tax:
- The state rate is $0.55 per $500.
- State tax = 2,000 × $0.55 = $1,100.
- Total Transfer Tax: $7,500 + $1,100 = $8,600.
So, for a $1,000,000 property, the seller pays $8,600 in transfer taxes.
Current Property Transfer Tax Rates in San Francisco
As of August 2025, San Francisco’s property transfer tax rates are:
| Property Value Range | City Tax Rate (per $500 or portion) |
|---|---|
| Up to $250,000 | $2.50 |
| $250,001–$999,999 | $3.40 |
| $1,000,000–$4,999,999 | $3.75 |
| $5,000,000–$9,999,999 | $11.25 |
| $10,000,000–$24,999,999 | $27.50 |
| $25,000,000 and above | $30.00 |
- State Transfer Tax: $0.55 per $500 for all properties, added to the city tax.
- High-Value Properties: For properties sold for $25 million or more, the effective rate is about 6% due to Proposition I (2020).
These rates apply to most real estate transfers, including leaseholds with terms of 35 years or more and certain legal entity transfers.
Exemptions from the Property Transfer Tax
Some property transfers are exempt from the tax if you provide proper documentation when recording the deed. Common exemptions include:
- Transfers between spouses or domestic partners.
- Gifts of property, like giving a home to a family member.
- Inherited property through a will or trust.
- Refinancing without a sale (no payment made).
- Transfers to or from your own trust.
- Transfers to or from your own LLC, LLP, or corporation.
To claim an exemption, complete a Transfer Tax Affidavit and submit supporting documents, such as trust agreements or marriage certificates.
Learn more about taxes in real estate with How Tax Policies Affect the Real Estate Market.
Recent Changes to the Property Transfer Tax
San Francisco voters have passed several propositions that updated the transfer tax:
- Proposition W (2016): Raised rates for properties sold for $5 million or more to fund free City College tuition.
- Proposition I (2020): Doubled rates for properties sold for $10 million or more, setting a 6% rate for those at $25 million or above to fund affordable housing and pandemic relief.
- Proposition C (2024): Waived the tax for the first five million square feet of nonresidential space converted to residential use, encouraging office-to-housing conversions to address housing shortages and high office vacancy rates (about 32% in 2024).
In December 2023, a new law extended a partial exemption for rent-restricted affordable housing until 2030, retroactive to 2017. Eligible properties pay a reduced rate of $3.75 per $500 (0.75%).
Want to know why San Francisco homes are so pricey? Check out Why Are Houses So Expensive in San Francisco?.
How is Transfer Tax Revenue Used?
The property transfer tax funds important city services in San Francisco, including:
- Education: Proposition W (2016) supported free City College tuition.
- Housing and Social Services: Proposition I (2020) funded affordable housing and homelessness prevention.
- Infrastructure: Taxes help maintain parks and roads.
However, transfer tax revenue has dropped since the pandemic, falling from over $500 million annually in the 2010s to lower levels, except for a spike in 2022 from major sales. This reflects a slower real estate market, affecting city budgets.
Impact on the Real Estate Market
The property transfer tax affects San Francisco’s competitive real estate market in several ways:
- Sellers: The tax reduces your net proceeds. For high-value properties, the 6% rate can be significant, influencing pricing.
- Buyers: While buyers don’t pay the tax directly, it can raise the sale price as sellers account for it.
- Investors: Higher rates on expensive properties may discourage some investors, impacting property values.
- Housing Development: Exemptions like Proposition C boost housing supply by encouraging office-to-residential conversions.
The recent revenue decline suggests a cooling market, possibly due to high tax rates or economic factors. Buyers and sellers should consider these factors when planning.
Need buying tips? Read Tips for First-Time Homebuyers.
Conclusion
The property transfer tax is a key part of San Francisco real estate. Sellers usually pay it, but it affects buyers through pricing. With tiered rates, exemptions, and recent changes like Proposition C, staying informed is crucial. The tax funds vital city services, but declining revenue shows market challenges. Consult a real estate professional to manage these costs.
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