California Documentary Transfer Tax

What is a Documentary Transfer Tax?

Short Answer

It is a tax imposed by the County and/or City for the transfer of property.

Explanation
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. This fee is the Documentary Transfer Tax and is part of the revenue that is generated for the individual counties and cities.

Who pays for the Documentary Transfer Tax?

Short Answer
Either the Buyer or the Seller.

Explanation
The payment of the transfer tax can be negotiated between the Buyer and the Seller.

Normally,
in Southern California, the Seller pays.
In Northern California, the Buyer pays.
In Central California, it can be a combination of both.

By the way, the County Recorder does not care who pays, as long as it gets paid if it is due.

How much is the Documentary Transfer Tax?

Short Answer
It depends on the location of the property. The County Transfer Tax is a standard of $1.10 per $1,000 of the sales price throughout the State. However, there are certain cities that also collect their own City Transfer Tax and those differ.

We have developed a California Documentary Transfer Tax Calculator . to help you calculate the county, the city (if any) and the total documentary transfer tax

Explanation
The California Revenue and Taxation Code has set this tax for all counties at $1.10 per $1,000 (or $0.55 per $500.00 to be exact per the Code) of the transfer value (sales price) of the property to be transferred.

Example #1:
An Arcadia property is sold for $1,000,000.
The Documentary Transfer Tax payable to the Los Angeles County is $1,100 ($1,000,000/$1,000 x $1.10). No City Documentary Transfer Tax.

Example #2:
A Santa Monica beach property is sold for $2,000,000.
The Documentary Transfer Tax payable to the Los Angeles County is $2,200 ($2,000,000/$1,000 x $1.10), and
the Documentary Transfer Tax payable to the City of Santa Monica is $6,000 ($2,000,000/$1,000 x $3.00).
Total Documentary Transfer Tax is $8,200 ($2,200 + $6,000).

Example #3:
A San Francisco property sold for $5,000,000.
The Documentary Transfer Tax payable to the County of San Francisco is $0 (San Francisco has no county transfer tax), and
the Documentary Transfer Tax payable to the City of San Francisco is $37,500 ($5,000,000/$1,000 x $7.50).
Total Documentary Transfer Tax is $37,500.00 ($0 + $37,500).

California Documentary Transfer Tax Calculator 

When is the Documentary Transfer Tax paid?

Short Answer
When the County Recorder receives the property transfer document (Grant Deed, for example) for recordation.

Explanation
The Documentary Transfer Tax is paid together with the recording fee at the time the County Recorder receives the property transfer document for recordation.

If this is through an escrow transaction, then the Documentary Transfer Tax is paid with all the other escrow closing costs and will show on the parties’ escrow closing statement.

Do I need to pay Documentary Transfer Tax if I transfer my property to my son?
Do I need to pay Documentary Transfer Tax if I transfer my property to my trust?

Short Answer
No. If there was no actual money involved in the transfer.

Explanation
There are certain exemptions to the payment of the Documentary Transfer Tax. Such exemptions include, transfers that are a “gift” and can be proven that no money was involved; transfers between individuals and their Revocable Trusts; transfers between spouses for no value.

If no Documentary Transfer Tax is declared, certain counties require an Affidavit to be completed, signed under penalty of perjury, and attached to the ownership document at the time of recordation.

Where can I find the tax code regarding Documentary Transfer Tax?

Answer
California’s Documentary Transfer Tax law is administered by the California Department of Tax & Fee Administration (previously known as the Board of Equalization. The tax code can be found on their website link as follows:

https://www.boe.ca.gov/lawguides/property/archive/2011/rt/11911.html