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August 21, 2020

San Francisco Board of Supervisors advance real property transfer tax increase to November 3, 2020 ballot

The Rules Committee of the Board of Supervisors of the City and County of San Francisco (San Francisco) has unanimously approved Initiative Ordinance 200654 (Proposal) for inclusion on the November 3, 2020 ballot. The Proposal seeks to amend the San Francisco Business and Tax Regulations Code to increase real property transfer tax rates as follows:

  • 5.5% (from 2.75%) on transfers of properties with a consideration or value of at least $10 million and less than $25 million
  • 6% (from 3%) on transfers of properties with a consideration or value of at least $25 million

If the ordinance passes, San Francisco will have the highest transfer tax rate in California and one of the highest transfer tax rates in the US. The San Francisco Controller estimates the rate increases will result in an average annual increase in revenue for San Francisco of $196 million per year.

Real property transfer tax in California

California does not impose a state-level tax on the transfer of real property. California law, however, authorizes counties and cities to adopt ordinances imposing a real property transfer tax.1

San Francisco's transfer tax ordinance states it is adopted pursuant to the California authorizing statute.2 Tax applies to the consideration or the value of the property transferred, including any indebtedness secured by the property. Customarily, the tax is paid by the seller, although both the buyer and seller are jointly and severally liable for the tax due.3 Although California state law limits transfer tax rates to 0.11% or less,4 some California "charter counties and cities," such as San Francisco, have imposed higher rates, claiming protection under the state Constitution's home-rule provisions.

In addition to direct transfers of real property, including certain leasehold interests, San Francisco's real property transfer tax also applies when the acquisition or transfer of ownership interests in a legal entity changes ownership of the entity's real property for property tax purposes under California Revenue & Taxation Code Section 64.5

The San Francisco transfer tax regime currently includes six different transfers tax rates.6 The current applicable rates range from 0.5% to 3%, depending on the total consideration or value of the property transferred or sold (including the value of any debt that is secured by the property and remains at the time of transfer).7 The tax does not apply progressively; the consideration or value determines the rate applied to the entire tax base. If approved by voters,8 the Proposal would increase the two highest rates as previously described, effective January 1, 2021.

Additional San Francisco tax developments

On July 28, 2020, the San Francisco Board of Supervisors also approved for inclusion on the November 3, 2020 ballot several proposed changes to the San Francisco Tax Code, including repealing the San Francisco payroll tax and increasing San Francisco Gross Receipts Tax rates.9 For more information on this proposed charter amendment, please see Tax Alert 2020-2107.

Please contact EY to discuss any current or planned sales or transfers of real property located in San Francisco, or transactions involving entities that directly or indirectly own real property located in San Francisco.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation
   • Michele Randall (
   • Laurie McGee Kowalski (
   • Allan Holzer (
   • Amy McLocklin (


1 Cal. Rev. & Tax. Code Section 11911(a).

2 San Francisco Business and Tax Regulations Code Article 12-C Section 1101.

3 Id. Section 1103.

4 Cal. Rev. & Tax. Code Section 11911(a) ("The board of supervisors of any county or city and county, by an ordinance adopted pursuant to this part, may impose … a tax at the rate of fifty-five cents ($0.55) for each five hundred dollars ($500) or fractional part thereof.") (See also subsections (b-c) applicable to any city within a county that imposes a real estate transfer tax providing for tax at a rate of half of the tax rate specified in subsection (a) and allowing a credit against county tax in the amount of the city tax paid.)

5 Id. Section 1114. Cal. Rev. & Tax. Code Section 64 describes transfers of interests in legal entities that constitute a change in ownership for purposes of California's property tax regime under Proposition 13.

6 San Francisco Business and Tax Regulations Code Article 12-C Section 1102.

7 Id.

8 The Proposal will become effective 10 days after the date the official vote count is declared by the Board of Supervisors.

9 Id.