In Oakland, transfer taxes are paid to the city and county authorities separately. The tax rates imposed by the two are different. Read on to learn more about transfer taxes in Oakland.
Transfer tax is money collected by your local county or city authorities to transfer the title of a property. These are known by various names in different parts of the country, including conveyance tax, documentary transfer tax, and deed transfer tax.
The transfer tax owed by parties involved in a real estate transaction is calculated based on the fair market value (FMV) of a house. That is the price at which a seller agrees to transfer a property to a buyer.
Apart from the value of the house, transfer tax also depends on where you’re located. Each city and state has its own rules about how much money needs to be paid to change ownership of a property. Similarly, the terms to qualify for a transfer tax exemption vary from region to region.
It is advisable for buyers and sellers to get the help of a real estate agent while calculating or filing transfer taxes. This is especially true if you’re a first-time buyer or engaging in a real estate transaction in a city that you’re new to.
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Who Pays Transfer Taxes in Oakland City: the Buyer or the Seller?
There are two levels of transfer taxes that are levied on real estate transactions in Oakland city.
One is the transfer tax that is owed to Alameda County. This tax is paid by anyone living in a city that falls under Alameda County’s jurisdiction. The county-level tax is usually paid by the seller.
Then there’s a city-level tax that applies for those who live in Oakland City. This amount is split equally between the buyer and the seller.
How Much Are Transfer Taxes in Oakland City?
The real estate transfer tax in Alameda County is $1.10 for every $1,000 of the selling price of a house. So if you sell a house for $600,000, you would pay Alameda County $660 in transfer taxes.
Then there’s also the tax that needs to be paid to the city of Oakland. Depending on the value of your home, this would be as follows:
|Home Value||Tax Rate||First Time Buyer Rate|
|$300,000 or less||1.0%||0.5%|
|$300,001 - $2,000,000||1.5%||1.0%|
|$2,000,000 - $5,000,000||1.75%||Unchanged|
|$5,000,000 or more||2.50%||Unchanged|
For a $600,000 home, that’s an additional $15 per $1,000 of the selling price of a house. That comes out to $9,000 in transfer taxes for a house that sells at $600,000. This amount is split equally between the buyer and the seller, so each party would pay $4,500 in transfer tax.
Can You Deduct Transfer Taxes?
Transfer taxes are not deductible in any state in the United States. What you can do, however, is use transfer taxes to reduce tax exposure when it comes time to sell your home.
The reason that’s possible is that home sellers are allowed to add the transfer taxes they’ve paid to the original cost of the home. This becomes important when it comes time to pay your capital gains tax.
Let’s say you bought a home for $600,000 and its current value is $700,000. That means you would have to pay capital gains tax on $100,000.
Now let’s say you paid $5,000 in transfer taxes while purchasing your home. That amount can be added to the original cost of the property. So now you pay capital gains tax on $95,000 as opposed to $100,000.
Transfer taxes are considered a closing cost, which means that they are usually paid when finalizing the purchase of a home. If you have any doubts about how much you need to pay in transfer tax, you can check your HUD-1 Settlement Statement.
Transfer tax is often one of the largest up-front costs that come with purchasing a home. Generally, only the down payment exceeds the transfer tax in terms of up-front costs.
Home buyers should ensure that they take transfer tax into consideration when budgeting their up-front expenses. If you aren’t completely familiar with the real estate tax structures in your city or county, get help from a local real estate agent.
Clever Partner Agents are real estate agents sourced from some of the top brokerages in the United States. Each one of our agents understands tax laws in their respective cities. You can trust our Partner Agent to let you know exactly how much you can expect to pay in transfer tax.
Visit our website to find a Partner Agent who can help you complete your tax obligations while buying or selling a home.