Documentary Transfer Tax

Overview

Documentary Transfer Tax

The Documentary Transfer Tax is due on conveyances of real property when the consideration OR the fair market value exceeds $100, unless an applicable statutory tax exemption is cited. The transfer tax is based on the purchase price or the fair market value, levied at the rate of 55 cents per $500, or fraction thereof. That number equates to $1.10 for every thousand dollars of value. The value of existing liens or encumbrances already of record which are assumed by the new owner/buyer on the property can be deducted before the transfer tax is computed. The transfer tax is paid at the time the deed or other conveyance instrument is recorded.

If the property is located within the city limits of the City of San Mateo, an additional conveyance tax is levied for payment to the City of San Mateo. The City of San Mateo conveyance tax and its exemptions are not discussed here.

The Documentary Transfer Tax must be paid on all conveyance documents at the time of recording unless an exemption applies.  To determine whether an exemption applies to your transfer, you should consult with a lawyer or authorized individual.  The Recorder does not offer legal advice or advisory opinions regarding the payment of transfer tax.

Some common exemptions contained in the Revenue & Taxation Code section 11921 through 11930 recognized by the Recorder are outlined as below.

Transfer Tax Information and Exemptions

Documentary Transfer Tax 

Documentary Transfer Tax is an excise tax imposed on the transfer of real property under the Revenue & Taxation Code section 11911 and San Mateo County Ordinance 2.93. Transfer Tax applies to all transfers “when the consideration or value of the interest or property conveyed (exclusive of any lien or encumbrance remaining thereon at the time of sale) exceeds one hundred dollars ($100)”. R&T Code § 11911.

Transfer Tax must be paid on all transfers at the time of recording unless an exemption applies. To determine whether an exemption applies to your transfer, you should consult with a lawyer or real estate professional. The Recorder does not offer legal advice or advisory opinions regarding the payment of transfer tax. You must fill out a Transfer Tax Affidavit detailing any claim to an exemption. 

Exemptions

  • Gift deed: Any inter vivos gift (between living persons) or gift transfer as a result of a death. R&T Code § 11930. Please note that you may have an obligation to report any gift transfers to the federal government.
  • Dissolution of Marriage: An allocation of real property pursuant to a judgment of dissolution of marriage, or an agreement in contemplation of such judgment. R&T Code § 11927
  • Certain Trust Transfers: A deed that transfers the grantor’s interest to or from a revocable trust, & statement is made that the trust is for the benefit of the grantor, and the transfer is not pursuant to a sale. R&T Code § 11930.
  • Certain Court Ordered Conveyances: If a court orders that property be conveyed for no consideration. R&T Code  § 11923
  • Conveyance which confirms a Name Change: This applies to a change in the name of the entity or person holding title – grantor & grantee are the same party. Name changes relating to a marriage or a corporate name change are examples. R&T Code §§ 11925(d) or 11923(a)(4).
  • Changes in the method of holding title: In which the grantor & grantee remain the same and the proportionate interest in the realty remains the same after the transfer; whether represented by stock, membership interest, partnership interest, co‐tenancy interest, or LLC. Can include conveyances made solely for the purpose of cancellation & retirement of corporation capital stock. R&T Code § 11925(d).
  • Certain Leases and Assignments of Leases: Leases and assignments of leases that have a term, plus options for renewal, of less than 35 years. Thrifty Corp. v. County of Los Angeles (1989) 210 Cal.App.3d 881.
  • Deed to a Public Entity: Any deed to a political subdivision of the United States. R&T Code § 11922.
  • Conveyance made in lieu of foreclosure: Applies where consideration is less than the unpaid debt. (Must clarify whether grantee is the foreclosing beneficiary). R&T Code § 11926.

Recording Conveyance Documents

When recording a document that conveys an interest in real property from one party to another, a signed tax declaration must appear on the face of the document stating the amount of Documentary Transfer Tax that is due. If the transfer is exempt from the Documentary Transfer Tax, the transfer tax amount must be marked as “$0″ or “none”, a statement of the applicable exemption and the associated Revenue & Taxation code must also appear on the face of the document.

Please note that exemptions from Documentary Transfer Tax and exclusions from reassessment are separate and may differ.

If the property is located within the city limits of the City of San Mateo, an additional declaration for the city conveyance tax must also appear on the face of the document.

Post

Documentary Transfer Tax Affidavit

Who can sign the affidavit?

Only one person must sign the Tax Affidavit. The transferor/transferee of the conveyance or an attorney/representative with full knowledge of the transaction can sign the Tax Affidavit

I am recording a Deed and it is exempt from Documentary Transfer Tax.  Do I still need to submit a Tax Affidavit?

Yes. The Tax Affidavit is submitted to help explain the nature of the transaction and the validity of the claimed DTT exemption. Be sure to attach any required supporting documentation to prove that your claimed DTT exemption is valid.

I am recording an Affidavit of Death. Do I need to submit a Tax Affidavit?

No. The Tax Affidavit is currently only required for the following documents: Deeds (including Grant, Quitclaim, Interspousal, Trust Transfer and Warranty Deeds), Leases, Memorandum of Leases, Assignment of Leases, Easements, Deeds in Lieu of Foreclosure, Land Contracts and Agreements for Sale.

I am adding my spouse to title and I am claiming that the DTT exemption of “Gift”.  Do both of us need to sign the Tax Affidavit?

No. Only the Donor is required to sign the gift tax disclaimer under question 4 on the Tax Affidavit. The Tax Affidavit itself (2nd page) can be signed by either party or a representative with full knowledge of the transaction.