Budget & Taxes (Debt & Bonds)

Existing law, the Documentary Transfer Tax Act, authorizes the imposition of a tax by a county or city and county, as provided, with respect to specified instruments that transfer specified interests in real property. This bill would, beginning January 1, 2027, prohibit a local jurisdiction, defined to include a city, including a charter city, county, or city and county, from collecting a transfer tax, as defined, levied on the sale or transfer of a real property interest conveyed if the combined transfer tax rate levied by the local jurisdiction exceeds 1.5% of the consideration paid for or value of the real property interest conveyed, except as otherwise provided. The bill would also prohibit a local jurisdiction from levying a transfer tax on the first sale of single-family housing property occurring within 5 years of one or more housing units on the real property being destroyed or made uninhabitable by a natural disaster, as defined. By imposing new duties upon local officials with respect to transfer taxes, this bill would impose a state-mandated local program. The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.