Understanding Sacramento’s Transfer Tax: A Quick Guide
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
Are you selling or buying a home in Sacramento? You may have been curious about transfer taxes in the Golden State. Is there a Sacramento transfer tax? Who pays for it? How much is it?
This quick guide will answer all of these questions and more. We will discuss who is responsible for paying the Sacramento transfer tax, how much it is, the types of transfer taxes you can expect to encounter, and any possible exemptions you might be eligible for.
What are transfer taxes?
The Federal Trade Commission defines transfer taxes as a “
When you transfer the title of your home — your legal right to own the property — to someone else, the government charges a tax on this exchange.
Where your property is located will determine what you’ll owe in transfer taxes according to local state, county, or city guidelines. Like other taxes, these are designed to generate revenue.
Who pays for transfer taxes in Sacramento?
In Sacramento, transfer taxes are paid by the buyer or the seller, depending on the terms of the sales agreement.
What are the types of transfer taxes?
Transfer taxes can differ based on local regulations, but they generally fall into three categories: state, city, and county. Here’s how it works in Sacramento.
State transfer taxes
In California, a documentary transfer tax of $0.55 is charged for every $500 of property value during transfers. Additional taxes may apply depending on specific locations within the state.
County transfer taxes
Sacramento County’s transfer tax rate mirrors the state rate at $0.55 per $500.
City transfer taxes
Sacramento imposes a city transfer tax of $2.75 for every thousand dollars of the purchase price.
Other transfer fees
Beyond transfer taxes, there may be additional fees from homeowner associations or local organizations. Since these can vary significantly by area, consulting a professional is a good idea.
Are transfer taxes deductible?
Transfer taxes are, unfortunately, not eligible for tax deduction.
However, you might be able to lower the amount you pay in capital gains taxes.
Capital gains, defined as the profit obtained from the sale of your home or the financial gain from selling your property, are subject to federal taxation just like profits from the sale of other assets.
Sellers have the option to treat paid transfer taxes as selling costs, allowing them to subtract these from their home’s closing sale price, according to the IRS. By doing so, they can diminish the capital gains taxes owed on any profit earned.”
Transfer tax exemptions in Sacramento
There are several possible transfer tax exemptions that sellers can be eligible for in Sacramento. Here are just a few:
- Gifts of property that are free of debts.
- Transfers into a revocable trust (not applicable if sold to a trust).
- Court-ordered conveyances.
- Properties valued under $100 are exempt from transfer taxes.
For a complete list, consult the Sacramento County transfer tax exemption sheet.
Estimating transfer taxes for your home sale
To get a precise estimate of the potential proceeds from selling your home in Sacramento, consider using HomeLight’s Net Proceeds Calculator. This tool accounts for key expenses like closing costs, transfer taxes, agent fees, and any improvements made to the property, giving you a clearer picture of your potential earnings.
Additionally, collaborating with a top real estate agent can offer valuable insights. Transfer taxes and other closing costs may sometimes be negotiable based on market conditions.
Header Image Source: (Aiden Frazier / Unsplash)
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