recorder's office

Sales Prices - Documentary Transfer Tax

You can compute the sales price of a piece of property using the documentary transfer tax listed on a property deed.

In California, $1.10 in county documentary transfer taxes must be paid for each $1,000 of the sales price of the property (but see the exception for San Francisco below). This affects all property back to 1968.

Thus, if the county documentary transfer tax is listed as $110, that means the sales price of the property was $100,000.

To calculate this, take the dollar amount listed for the county documentary transfer tax on the property deed, divide that number by 1.1 and then multiply the result by 1,000.

In the example above, divide the $110 in tax by 1.1 (which equals $100), and then multiply by 1,000 (which equals $100,000 for the sales price).

Also make sure you are looking on a deed at the documentary transfer tax for the county, not for a city.

City Transfer Taxes

Some cities also tack on a separate, additional documentary transfer tax, and the rates for those vary from city to city. See the chart at the dirtlawyer.com webite, which is run by a law firm that specializes in real estate law. It shows some of the city transfer taxes that have been imposed in California.

San Francisco Documentary Transfer Tax

Because San Francisco is simultaneously both a county and a city, its documentary transfer tax is a combined county and city tax. Thus in San Francisco County the documentary tax rate is different from other California counties.

See this section of the website for the San Francisco Office of the Assessor-Recorder for information on the documentary transfer tax rates on property sales in San Francisco.

Limitations on Using the Documentary Transfer Tax

There will be occasions when the documentary transfer tax does not reflect the actual sales value of a piece of property.

For example, if a buyer assumes responsibilty for repaying an existing loan or other liens the seller had on the property, those are not included in calculating the tax. The tax is only on the actual money that exchanged hands in the transaction, not on the assumption of previous debt.

Thus if a buyer paid $80,000 in cash for a home, and also assumed a $20,000 loan on the home, the documentary transfer tax would only be based on the $80,000 (and no public documents usually are filed listing the assumed loans or liens).

These cases are relatively rare, however, as most loans and liens are paid off in escrow when a sale occurs and thus are included in the sales price. So in most instances the documentary transfer tax will reflect the full sales value of the property.

Still it's important to verify any sales price calculated from the documentary transfer tax with the buyer/seller.

A buyer also may file a Declaration of Transfer Tax to keep confidential the amount of the tax paid. This too is very rare.

Some property transactions, such as gifts between family members or changes of property ownership that are the result of divorce settlements, are exempt from the transfer tax.

Finally, you can't use the documentary transfer tax formula for properties sold prior to 1968. That was the year the California Legislature authorized counties to collect a documentary transfer tax on property transactions at a rate of $1.10 per $1,000 of sales price (almost all California counties now do so).

Prior to 1968 there was a similar federal stamp tax on each real estate transfer. The federal stamp tax was enacted in 1914 and the rate varied over the years, rising to the $1.10 per $1,000 figure until it was repealed in 1967. The $1.10 per $1,000 figure then was adopted by the California Legislature for counties in California.

Using Property Deeds and Documentary Transfer Taxes in a Story

To see how property sales prices can be used in a story, read this San Diego Union-Tribune/Copley News Service story about a member of Congress from San Diego County, Randall Cunningham, who sold a piece of property there at an allegedly inflated price to a government contractor (Cunningham subsequently pleaded guilty to bribery and tax evasion).

You can go to the San Diego County Recorder's Office online index to see references to the two property sales mentioned in the story.

For example, at that page do a search for:

Fifteen Twenty Three New Hampshire Ave

Click on the link to the second document to see some of the details on the sale of the house by Randall Cunningham to the company, Fifteen Twenty Three New Hampshire Ave L L C. The online index doesn't list the sales price on the property, but you could get that information by going to the San Diego County Recorder's Office and looking up this document.