San Francisco Mayoral Candidate, John Avalos is probably hoping the city’s high-end home owners don’t remember that he was a lead proponent of Prop N, which significantly increased transfer tax rates on sales of homes and businesses exceeding $5M.
With the passing of Prop N, transfer tax rates increased on December 17, 2010. The effect for homeowners is dramatic: If a home sells for $5M the seller pays $37,500 in transfer tax fees. If the home sells for $5,000,001, the seller assumes $100K in transfer tax fees.
Many predicted it would significantly slow luxury residential sales. I had also thought we would see a trend toward keeping sales prices below $5M unless the home was valued excessively above that. So, with these two hypotheses in mind, let’s take a look:
The high-end real estate market continues to have strong sales.
There have been more $5M+ sales in 2011 despite the significant increase in the transfer tax rate.
It seems that the increase in the cost associated with selling hasn’t affected the high-end real estate market as much as had been anticipated. That’s good news for the city’s coffers, and for those selling their multi-million dollar residences in San Francisco.
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