"How Is California's Documentary Transfer Tax Figured on a Home Sale, and Who Pays It at Closing?"

Near the top of a California grant deed there is a line that reads Documentary Transfer Tax, followed by a dollar figure. The escrow officer types that figure in before the deed goes out for recording, and the county recorder will not record the deed until the tax behind it has been paid. The arithmetic behind that figure is in state law, and whose money pays it is in your contract.

Under California Revenue and Taxation Code section 11911, the county documentary transfer tax is fifty-five cents for each $500 of the price, or fraction of $500, after subtracting any loan that stays on the home. A city may add a tax at half that rate, and the county credits it against its own, so the two together still total the county amount. Section 11912 makes both the seller who signs the deed and you, the person the deed is made for, liable to the county, and your purchase contract decides which of you pays.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, NMLS #483943, through C2 Financial Corporation, licensed in fifteen states, including California. I want to walk you through how the California tax is figured, why a city tax does not always mean a bigger bill, and who pays it.

How the California documentary transfer tax is figured

California authorizes the tax in Revenue and Taxation Code section 11911, and the words in that section are the whole formula. A county board of supervisors may impose a tax on each deed by which real property sold in the county is conveyed to the purchaser. The rate is "fifty-five cents ($0.55) for each five hundred dollars ($500) or fractional part thereof" of the consideration or value of the property conveyed. It applies when that consideration, "exclusive of the value of any lien or encumbrance remaining thereon at the time of sale," exceeds one hundred dollars.

Consideration is the statute's word for what you are paying, and on an ordinary purchase it is the price in your contract. The tax is figured in $500 steps, and "or fractional part thereof" means the last partial step counts as a whole one. A price that is not an even multiple of $500 gets rounded up to the next $500 before the fifty-five cents is applied.

On a normal sale the seller's loan is paid off through escrow and nothing remains on the home, so the full price is taxed. If you assume the seller's existing loan and it stays on the home, the amount you assumed comes off the base before the tax is figured.

A city transfer tax in California does not always mean a bigger bill

California lets a city inside a taxing county have its own documentary transfer tax, and the way the statute pairs the two decides whether you pay more. Subdivision (b) of section 11911 lets a city in a county that imposes the tax adopt a city tax at one-half the county rate. Subdivision (c) then says a credit "shall be allowed against the tax imposed by a county ordinance" for the amount of any tax due to a city under subdivision (b).

So in a city that adopted its tax under the Act, the city collects half the county rate and the county credits that half against its own. The total on the deed is the same fifty-five cents per $500 it would have been with no city tax at all. Section 11931 spells out where the money goes: one-half to the city and one-half to the county.

The last sentence of subdivision (c) covers a city tax that does not follow the Act. It reads, "No credit shall be allowed against any county tax for a city tax which is not in conformity with this part." Subdivision (b) describes a city tax at one-half the county rate, so a city tax that is not that tax gets no credit, and the city collects it in addition to the county's. The California mortgage page says some cities impose "an additional city transfer tax on top of the county's," and that is how two addresses a few miles apart can close with different totals.

I am not printing a list of city rates here, because they are set and revised locally and a figure that is right in one city is wrong in the next. The Los Angeles page, which carries the county recorder's own schedule, is the one place on this site with sourced Los Angeles County figures. It shows the county's tax at $1.10 per $1,000, which is the same fifty-five cents per $500 written a different way. It shows five cities in that county adding their own tax on top of it, the City of Los Angeles among them at $4.50 per $1,000, and no city in Orange County adding one. For any other California city, the recorder's office in that county publishes the current rates.

Who pays the transfer tax in California?

The statute's answer is in Revenue and Taxation Code section 11912. The tax "shall be paid by any person who makes, signs or issues any document or instrument subject to the tax, or for whose use or benefit the same is made, signed or issued." The seller signs the grant deed, so the seller makes and signs the taxable document. The deed is made for your use and benefit, because it is what puts the home in your name, so the county can look to either of you for the tax.

The recorder's part is in section 11933. The recorder does not record a document subject to the tax unless the tax is paid at the time of recording. The recorder relies on the signed declaration of the tax due that section 11932 requires on the face of the document, which is the line on your deed. In practice the escrow holder pays the tax out of the closing funds when the deed records, and your contract decides whose funds those are.

California has no state law deciding whether you or the seller pays, so the purchase agreement decides it, and the agreement usually follows local custom. The California mortgage page records the custom in Southern California: the seller usually pays the county documentary transfer tax. The same page is clear that no state law imposes a universal allocation and that custom varies by region. The line in the contract is a term you negotiate, and it is worth reading before you sign the offer rather than at the signing table.

The place you will see your share is Section E of your Loan Estimate and Closing Disclosure. The federal rule at 12 CFR 1026.37(g)(1) puts two lines under Taxes and Other Government Fees: Recording Fees and Other Taxes, then Transfer Taxes. The flat recording charges for the deed and the deed of trust go on the first line, and the documentary transfer tax goes on the second, in your column only when the contract makes it yours. How closing costs are built, line by line covers the rest of that page.

Does a refinance trigger California's documentary transfer tax?

No. The tax applies to a deed that transfers a home someone bought, and a refinance does not transfer the home to anyone. It records a new deed of trust, and a release of the old lien is recorded once the loan has been paid off. Revenue and Taxation Code section 11921 says the tax does not apply to "any instrument in writing given to secure a debt," and a deed of trust is exactly that. Recording charges still apply on a California refinance, and the Transfer Taxes line stays blank. If a deed changing who is on title records as part of the refinance, that deed is a separate document, and the recorder will want to see which exemption applies to it.

The steps, in order

1. Please read the cost allocation section of the purchase agreement before you sign the offer. It names who pays the county transfer tax and any city transfer tax, and in California that term is yours to negotiate.
2. Please confirm which city the home is in, and whether that city has its own transfer tax. The county assessor's parcel record shows the city, and the county recorder publishes the city rates.
3. Please check whether any loan is staying on the home. If you are assuming the seller's loan, the amount you assume comes off the base.
4. Please have the actual city and county priced in your estimate. A statewide average will not match what your city and county charge, and a California pre-approval should be built for the city you are buying in.
5. You'll want to read Section E of your Closing Disclosure when it arrives. The Transfer Taxes line in your column should match what the contract says you agreed to pay. The Preliminary Change of Ownership Report travels with the same deed to the same recorder and has its own fee to keep off that page.

Common transfer tax mistakes on a California purchase

Using a statewide calculator figure. Each county sets its own documentary transfer tax under section 11911, and a city tax is either credited against it or added on top, depending on how the city adopted it. A statewide calculator cannot know which of those applies to your address.

Assuming the seller pays because that is the custom. In Southern California the seller usually pays the county tax, and that custom is not a law. If your contract moves the tax to you, the contract is what your closing follows.

Reading a city tax as a double charge. A city tax adopted under section 11911(b) is credited against the county tax, and only a city tax that does not conform to the Act is added on top.

Confusing recording fees with transfer tax. The recorder's flat fee for each document and the transfer tax figured on the price land on two different lines of Section E, Recording Fees and Transfer Taxes. Mortgage recording taxes and fees by state puts California's side of that ledger next to the other states.

An illustration, with invented numbers

Numbers below are made up to show the arithmetic in section 11911. They will not match what any real California address pays.

Say you are buying a home for $650,250 in a California city with no city transfer tax. The seller's loan is paid off through escrow, so the full price is the base.

Price                                       $650,250
Divided by $500                              1,300.5 steps
Rounded up, "or fractional part thereof"     1,301 steps
x fifty-five cents                           $0.55
---------------------------------------------------
County documentary transfer tax              $715.55

Now suppose the same home is inside a city that adopted its tax under section 11911(b), at half the county rate.

City tax: 1,301 steps x $0.275               $357.78
County tax: 1,301 steps x $0.55              $715.55
Less credit for the city tax                 ($357.78)
---------------------------------------------------
County collects                              $357.77
Total transfer tax on the deed               $715.55

The total is the same $715.55 it was with no city tax, split between two governments under section 11931.

Now suppose instead that you are assuming the seller's existing loan, with $300,000 still owed, and it stays on the home.

Price                                       $650,250
Less the lien remaining at the time of sale ($300,000)
---------------------------------------------------
Taxable consideration                        $350,250
Divided by $500, rounded up                  701 steps
x fifty-five cents                           $0.55
---------------------------------------------------
County documentary transfer tax              $385.55

Pricing a California purchase with the transfer tax included

The transfer tax, where the contract makes it yours, is cash at the closing table rather than part of your monthly payment, and it belongs in your estimate next to the recording fees and the escrow deposit. You can price your own California scenario and choose a rate option, which you can change later. The estimate builds closing costs for the actual California jurisdiction rather than a statewide average. Your next read, when you are ready for a letter a seller will take seriously, is what a California pre-approval has to account for. You are welcome to call me with any question about the cost allocation in a California contract.

Nothing here is a loan approval, a denial, a commitment to lend, or tax or legal advice. The documentary transfer tax on a specific California property is figured under state law and local ordinance by the county recorder, and the current county and city rates are worth confirming with that office.

Common questions

How is the documentary transfer tax calculated in California?

Under California Revenue and Taxation Code section 11911, a county may impose the tax on a deed conveying real property that was sold. The rate is fifty-five cents for each five hundred dollars of the consideration, or any fractional part of five hundred dollars, measured exclusive of any lien or encumbrance remaining on the property at the time of sale.

Does a city transfer tax in California mean I pay the transfer tax twice?

Not when the city tax was adopted under the state Act. Section 11911 lets a city in a taxing county impose a tax at one-half the county rate and requires a credit against the county tax for it, so the total on the deed stays at the county amount. The same section allows no credit for a city tax that does not conform to the Act, so a city tax that is not the half-rate tax the Act describes is added on top of the county's.

Who is responsible for paying the documentary transfer tax in California?

Revenue and Taxation Code section 11912 says the tax is paid by any person who makes, signs or issues the taxable document, or for whose use or benefit it is made, signed or issued. The seller signs the deed and the deed is made for you, so both of you are liable to the county. State law does not allocate the tax between you and the seller. The purchase contract does, and in Southern California the custom is for the seller to pay the county tax.

Do I pay documentary transfer tax when I refinance in California?

No. Section 11921 of the Revenue and Taxation Code exempts any instrument in writing given to secure a debt, and a refinance records a deed of trust rather than a deed conveying the property. Recording fees for the new deed of trust still apply. If a deed changing who is on title is recorded as part of the refinance, that deed is a separate document and the recorder will want to see which exemption applies.

Estimates and educational information are not a loan approval or commitment to lend.