Increased Transfer Tax Proposal Introduced to Help With City’s Coronavirus Recovery
A San Francisco supervisor has proposed a new ballot measure that would double the city’s transfer taxes for property sales valued at or above $10 million. (Getty Images)
San Francisco’s expensive property sales could get even pricier under a proposed ballot measure that would double the city’s transfer tax for transactions valued at $10 million or more.
To prepare for an anticipated wave of investors looking to capitalize on distressed properties in the wake of the coronavirus pandemic, Supervisor Dean Preston has introduced a plan to raise money for COVID-19 relief efforts through an increased transfer tax on both commercial and residential properties. The proposal is expected to generate between $100 million to $150 million a year for programs such as mortgage and rent relief for San Francisco tenants and small property owners suffering financial losses brought about by the crisis.
As proposed, the measure would increase the tax on commercial and residential property sales valued at more than $10 million. The real estate transfer tax for buildings sold between $10 million and $25 million would increase to 5.5% from 2.75%. For buildings sold for $25 million or more, the tax would jump to 6% from 3%. Property owners who sell their assets to the city or to an affordable housing developer would beTo get a spot on the November ballot, the measure would need the support of at least four of the city’s 11 supervisors. It also would require more than 50% approval among voters to pass.
The proposed measure was prompted by rising concerns among the city’s housing advocates that the coronavirus pandemic will result in a rise in evictions and displaced tenants similar to the Great Recession. It has already garnered support from groups such as the San Francisco Tenants Union and the Council of Community Housing Organizations, a group of affordable housing developers.
“We know what happens when large real estate speculators take over buildings — long-term, rent controlled tenants are forced out to maximize shareholder profit,” Deepa Varma, executive director of the San Francisco Tenants Union, said in a statement. “This measure would deter real estate speculation, encourage owners to sell to the city or affordable housing providers, and make sure when this kind of transaction takes place, that the city is generating the funds needed to help struggling San Franciscans get back on their feet.”
Neither the San Francisco Association of Realtors nor the the San Francisco Apartment Association, which lobbies on behalf of local landlords, responded to requests for comment.
CoStar’s director of market analytics for the San Francisco Bay Area, Jesse Gundersheim, said San Francisco continues to be a premier market for investors. Sales volume hit a record high last year with more than $9 billion worth of transactions, and more than $1 billion of trades were made within the first quarter of 2020.
Some of the largest transactions last year included e-cigarette maker JUUL’s purchase of 123 Mission St. for $397 million, Atlanta-based Jamestown’s acquisition of Levi’s Plaza for $826 million and Paramount Group’s deal to buy Market Center for $722 million last December.
Courtesy of CoStar News-May 5, 2020