Real Estate Transfer Tax

FY 2021-23 Proposed Policy Budget

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%

As shown in the graph below, 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 2018-19, the 10 highest-value transfers were worth, in aggregate, over $1.2 billion; two of the properties sold for more than $250 million. By comparison, in FY 2019-20, the 10 highest-value transfers were worth just $769 million. The number and value of these very 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.

Despite the increases in unemployment, real estate transfer activity has continued throughout the pandemic. FY 2020-21 RETT revenue is on pace to exceed the revenue received during the 2019-20 fiscal year, partly due to continued increases in residential property values and sales activity as residents sought larger spaces from which to shelter in place and work from home. In addition, the recent growth in RETT is also due to the sale of several large commercial buildings, as well as the tax rate increase. The chart below shows an average growth of 5.18% in RETT over the forecast period.