Most states in the U.S. require real estate transfer taxes. Typically, any time you buy property, whether it be a house or a vehicle, you are required to pay a tax on the transfer of whatever that property is. If you live in a state that has transfer taxes, any time property changes hands, a transfer tax (and possibly other fees) are due.
While most states share the fact that they require transfer taxes, these rates vary depending on the area in which the property is transferred. How much you’ll be expected to pay and who is expected to pay are two aspects of transfer taxes that can change drastically based on the state, city, and even the locality in which you live.
Whether you’re buying or selling, it’s critical that you work with a local real estate agent who can help you through the process, explain transfer taxes, and ensure you understand the process completely.
By working with a reputable expert, you’ll be able to ensure that you know what to expect and are prepared for the costs involved in transferring property in Alameda County.
Who Pays Transfer Taxes in Alameda County: the Buyer or the Seller?
In California, transfer taxes are typically referred to as a Documentary Transfer Tax. They’re called this because when the ownership of a property changes hands, the ownership transfer document (Grant Deed, for example) needs to be recorded in the County Recorder’s office where the property is located. The County Recorder, under the Revenue and Taxation Code, collects a “transfer fee” on behalf of the State Board of Equalization.
Typically, in California, it varies with who pays the transfer tax. In Northern California, the buyer normally pays. In Southern California, the seller pays the tax, and in Central California, it can be a mixture of both. This means in Alameda County, if you are a buyer, you will be required to pay the tax. Keep in mind, it is common for buyers and sellers to negotiate who pays the transfer tax.
There are also some exemptions to having to pay transfer taxes in Alameda County. For example, transfers that are a “gift” and you can prove that no money was involved, transfers between individuals and their Revocable Trusts, and transfers between spouses for no value do not require you to pay a transfer tax. In short, if there is no money being made from the sale, transfer taxes don’t have to be paid.
How Much Are Transfer Taxes in Alameda County?
Alameda County includes cities like San Francisco and the rest of the bay area. This is important to note because you will be required to pay Alameda transfer taxes, as well as the city transfer taxes. However, some cities in Alameda County do not require transfer taxes, so this is when it’s important to perform proper research to understand what costs you’re responsible for.
The county tax rate is the same across the state of California. This means that every county, including Alameda, has a rate of $1.10 per $1,000 of the assessed property value. So, if you purchase a house that costs $600,000, you are required to pay $600 in county transfer taxes. However, the costs don’t stop here because some cities in Alameda County will require that you pay city-level transfer taxes.
Using the same amount of $600,000, if you were to buy or sell a house in Oakland, which is in Alameda County, you would have to pay $9,000 in city transfer taxes. This is quite a jump from $600 in county transfer taxes. Altogether you would owe $9,600 in transfer taxes. However, if you were to buy or sell a house in San Francisco, which is also in Alameda County, you are not required to pay any city transfer taxes. This is because they have elected not to require these on the sale of a home.
This just goes to show how dramatically different transfer taxes can be based solely on where the transfer of property is taking place.
Usually, the seller’s agent will obtain a check from the seller that covers the amount of the transfer tax before the deed is recorded. However, just because you’re a buyer doesn’t mean you’re off the hook. In some cases, the buyer is responsible.
This is why it’s so important to talk to your real estate agent and obtain expert guidance throughout the home buying and home selling process.
Can You Deduct Transfer Taxes?
Typically, you can’t deduct transfer taxes when it comes time to file your tax return. However, if you’re using the property in question as a rental home or investment property, though, you can sometimes write it off as a business expense.
That being said, in most cases that involve the traditional sale or purchase of property not related to business transactions, you won’t be able to write off the cost of the transfer taxes.
However, there might still be a light at the end of the tunnel in this situation. What people sometimes do is wrap those taxes into the cost basis of the property. The cost basis of the property is essentially what you had to pay in order to obtain the property.
The cost basis is used to come up with the amount of capital gains taxes you’ll owe. Your capital gains are calculated by deducting the cost basis of your property from the total price, so including the cost of the transfer taxes can be helpful in lowering these taxes.
In situations where the seller is responsible for paying the transfer taxes, this won’t be much help to them. As a seller, you might just be left with taking the cost of transfer taxes into account when listing your home for sale in order to plan accordingly.
Regardless of who pays the transfer taxes, you can expect them to be paid on closing day. Keep in mind, real estate transactions are also subject to a variety of taxes like federal and state taxes, as well as the capital gains tax mentioned earlier. These are all costs that are important to take into account before buying or selling a home in Alameda County. That’s why it’s so important to work with a qualified, experienced real estate agent in your area.
An experienced agent can help you understand the fees and taxes that apply to your location, advocate for you through the process, and help you obtain the best outcome. Knowing what’s ahead can help you plan accordingly so you don’t run into any surprises that could be financially detrimental. Both buyer’s agents and seller’s agents can help you get the best deal, find rebates where available, and some — like Clever Partner Agents — work on a flat-fee basis.
Real estate taxes are complicated, and it’s easy to make costly mistakes. Partnering with a trusted agent can help you ensure that you have a successful and positive selling or buying experience in Alameda County.