Watch out for California transfer taxes in transactions involving real-estate holdings

By Larry Tannenbaum and Stephanie L Pfaff

When compared with the real-estate transfer tax systems of other states, the California Documentary Transfer Tax Act imposes a relatively low tax at the rate of $1.10 (65p) per $1,000 of value (exclusive of liens existing at the time of transfer).

In recent years, however, a number of California counties and cities have, through local ordinances, started to impose transfer taxes at higher rates or have expanded the circumstances under which the real-estate transfer tax is imposed.

Companies with real-estate holdings in California should take note of this trend. Given the budget constraints faced by California’s counties and cities, the scope of transfer taxes in that state will likely expand…

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