Santa Monica's Real Estate Transfer Tax
The City of Santa Monica currently had a two-tiered Real Estate Transfer Tax. The initiative that passed in November of 2022 added a third tier.
- Tier 1: 0.41% assessment for a property valued at less than $5 million.
- Tier 2: 0.71% assessment for a property valued at $5 million or more.
- Tier 3: 5.71% assessment for a property valued at $8 million or more.
Passed in November of 2022: The initiative was called "Funding for Homelessness Prevention, Affordable Housing, and Schools Ballot Measure."
Residents of Santa Monica have approved Measure GS, which authorizes the city to enact a third tier to its real estate transfer tax structure. Under current law, the transfer tax rate depends on the gross value of realty transferred (reduced by lien encumbrances remaining on the property at the time of transfer). The rate is 0.41% when the gross value is less than $5 million and 0.71% when the gross value is $5 million or more (which rates are inclusive of a county level tax). This 0.71% rate tier was recently added by ballot measure approved in November 2020. Now, the residents of Santa Monica have approved an additional tier, which, beginning March 1, 2023, will impose tax at a rate of 5.71% when the gross value is $8 million or greater. As the language of Santa Monica’s measure is incorporated into the general transfer tax regime and is not drafted as a separate tax, the typical transfer tax exemptions should apply.
The initiative that was called "Funding for Homelessness Prevention, Affordable Housing, and Schools Ballot Measure.", as the title states, revenue from this measure will go toward funding school and homelessness prevention programs. In addition, the initiative will be creating a funding formula dictating the proportion of funding to each program. The initiative will also create an eleven-member Resident Oversight Committee. The committee will be responsible for prioritizing spending according to the set formula.
Los Angeles and Santa Monica follow a growing list of cities in increasing transfer tax imposed on high value transactions, including San Francisco which now has a tax rate of 6% on transfers over $25 million, San Jose which now has a tax rate of 1.5% on transfers over $10 million, and Culver City which now has a tax rate of 4% on transfers over $10 million.
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