Real Estate Transfer Tax

Until December 31, 2018, the Real Estate Transfer Tax (RETT) rate on residential and commercial sales was 1.61% of the value of each real estate transaction. Oakland’s share was 1.5% with Alameda County receiving the remaining 0.11%. The tax is triggered by the transfer of property ownership, and both the buyer and seller are responsible for ensuring the tax is paid.

On November 6, 2018, Oakland voters approved Measure X, establishing a progressive real estate transfer tax rate for the City. The new rates became effective on January 1, 2019 and are as follows:

Transfers up to $300,000 1.00%

$300,001 to $2,000,000 1.50%

$2,000,001 to $5,000,000 1.75%

$5,000,001 and above 2.50%

RETT revenues can be volatile and subject to fluctuations based on a handful of high value transfers in a given year. For example, in FY 2019-20, there were six transfers of properties individually worth over $50 million, which in the aggregate generated $13.3 million of RETT revenue. Over FY 2020-21 and FY 2021-22, on average, the small number of sales above this threshold generated $18.2 million. Through the first half of FY 2022-23, however, such transactions are only on pace to provide $7.4 million by year-end.

The number and value of these large transactions cannot be easily predicted year to year. The Consolidated Fiscal Policy states that RETT greater than 15% of GPF Tax Revenue is to be considered one-time or “Excess RETT”. One-half of Excess RETT may be spent on one-time expenditures, 25% is to be allocated to the Vital Services Stabilization Fund, and 25% is allocated to repayment of long-term obligations.

Real estate transfer activity continued throughout the pandemic but dropped considerably in FY 2022-23 as the number of transactions has slowed considerably. FY 2021-22 RETT revenue was the highest ever recorded, at $138.4 million. However, reductions in transfer activity, mostly due to high mortgage rates, are expected to decrease revenue significantly for the FY 2022-23, with estimated revenue of just $88.5 million. The forecast for FY 2023-24 and 2024-25 envisions increasing real estate transfer activity, with an average growth of 11% in RETT.

RETT is expected to grow from an estimated $88.5 million in FY 2022-23 to an estimated $110.4 million in FY 2023-24 and an estimated $124.6 million in FY 2024-25.