I'm a Keller Williams realtor in the Bay Area. I'd like to share various pitfalls in real estate. First, City Transfer Tax in San Jose. In Santa Clara County, California, there are only three cities imposing City Transfer Tax: Palo Alto, Mountain View, and San Jose. Before July 1, 2020, the tax rate for all three cities was 0.33% of the sale price. Other cities in Santa Clara County do not impose this tax. However, starting from July 1, 2020, San Jose introduced what's known as Mansion Tax: for houses sold between $2 million and $5 million, an additional 0.75% tax of the sale price is applied; for houses between $5 million and $10 million, it's 1% additional; and for houses over $10 million, it's 1.5% additional. For example, for a $3 million house, the total San Joise city transfer tax would be $32.4K calculated as follows: $3M x (0.33% + 0.75%). What's even wrose is that this tax isn't progressive; instead, it applies to the entire price range. For instance, a $2 million house would incur $15K more tax than a $1,999,999 house. When writing an offer, it's better to offer at $1,999,999 instead of rounding it up to $2 million. This tax is typically split 50/50 between sellers and buyers; so if sellers understand this principle, they would be happy to agree. Additionally, the threshold for this tax does not increase with inflation. Over time, the tax burden in San Jose would be worse. Can you share any other cities with similar tax pitfalls?
Thanks for sharing. I didn’t know this and the rule seems really dumb. This would make a difference for buyers who are considering properties on the borderline of San Jose vs. other cities ( cupertino, Campbell, Santa Clara).
True.
Who pays for it? seller or buyer?
50/50 split by seller and buyer
Yes that’s like a mini realtor commision
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Don't San Mateo and Hillsborough have it too
Right. San Mateo 0.5%; Hillsborough 0.3%.