Senate Bill 1411 - Documentary Transfer Tax Uniformity

February 21, 2018

Summary:

SB 1411 creates a uniform maximum Documentary Transfer Tax (DTT) rate across the state at the statutory rate of $0.55 per $500 of considered property value.

Issue Background:

In the recent 926 North Ardmore Avenue, LLC v. County of Los Angeles case, the California Supreme Court upheld the decision that Los Angeles County may impose a DTT on transfers of interests in legal entities holding real property when such transfers are treated as a change in ownership for property tax purposes under Proposition 13, specifically those that result in a greater than 50% interest in control of the legal entity.

This court case raises concerns about the implications of cities levying different tax rates and interpreting the DTT locally. Some cities and counties impose a DTT on the transfer of ownership interests in a legal entity, beyond what has been statutorily understood.

Private entities and individuals purchasing or transferring property must seek additional counsel and pay increasing taxes to navigate the unnecessarily expanding tax structure of the Documentary Tax Act. Twenty-five cities in California have enacted their own local real property transfer tax, collecting DTT revenues up around $7.00 greater than the original rate.

Articles:

Contact:

Spencer Street, (916) 651-4037
Spencer.Street@sen.ca.gov