San Diego County Cancels 55-Fold Transfer Tax Increase: Emergency Relief for Sellers, But Mansion Tax Still Threatens Luxury Market

What Just Happened: San Diego County's Canceled Transfer Tax Proposal

The timeline of events reveals how close San Diego County came to implementing one of California's most aggressive transfer tax increases—and how quickly public pressure derailed the effort.

On December 18, 2025, San Diego County quietly issued a request for quotes from lobbyists to help push changes to state law that would allow the county to raise real estate transfer taxes. According to a draft contract reviewed by Voice of San Diego, supervisors wanted state lawmakers to authorize counties to increase taxes on real estate sales from the current 55 cents for every $500 in value to $30.55 for every $500—representing a more than 5,500% increase.

The contract was scheduled to be awarded on January 1, 2026, with lobbyists tasked with securing legislative approval in Sacramento. But before the lobbying effort could gain traction, news of the proposal leaked to the public and real estate community.

Supervisor Jim Desmond immediately denounced the proposal on social media, calling it "a massive new transfer tax" that would devastate San Diego County homeowners and sellers. His public opposition, combined with backlash from real estate industry groups and concerned taxpayers, forced county officials to cancel the request for quotes on January 7, 2026.

County spokesperson Tammy Glenn offered a vague explanation for the cancellation, saying only that the contract was cancelled "to explore different options." That statement suggests county leadership hasn't abandoned the goal of raising transfer tax revenue—they've simply paused to reconsider their approach.

Meanwhile, Democratic Supervisors Terra Lawson-Remer and Monica Montgomery Steppe, who sit on a subcommittee tasked with finding new revenue for the county, have commissioned a separate $320,000 contract with political consultants to study potential sales tax measures. The county's budget challenges clearly haven't disappeared, which means the pressure to find new revenue sources remains intense.

The Devastating Math: How Much Sellers Would Have Paid

To understand just how dramatic this proposed transfer tax increase would have been, let's break down the actual financial impact on San Diego County homeowners at different price points.

San Diego County currently uses California's baseline transfer tax rate of $0.55 per $500 of property value, which works out to $1.10 per $1,000. This rate has been standard across most California counties for decades and is generally considered a minor closing cost compared to real estate commissions, escrow fees, and other transaction expenses.

That's a relatively modest expense that most sellers can absorb without dramatically affecting their net proceeds.

Now let's look at what that same home sale would have cost under the proposed $30.55 per $500 rate:

For luxury properties in La Jolla, Point Loma, and Rancho Santa Fe, the impact would have been even more severe:

To put these numbers in perspective, a $60,200 transfer tax on a median home would be roughly equivalent to a 6% real estate commission on that same property. In other words, sellers would effectively be paying the county as much as they'd pay their listing agent—a cost that would dramatically reduce net proceeds and potentially make selling unaffordable for homeowners who need to access their equity for retirement, downsizing, or other life transitions.

For luxury sellers, a $300,000 or $600,000 transfer tax would represent a catastrophic wealth extraction that could fundamentally alter estate planning, retirement strategies, and intergenerational wealth transfer decisions.

Mansion Tax Still Threatens Luxury Market: What Board Chair Said

While the broad transfer tax increase has been canceled, luxury homeowners in San Diego County's most exclusive neighborhoods face a different and potentially more immediate threat: a targeted "mansion tax" on properties valued at $5 million or more.

Board Chair Terra Lawson-Remer has been explicit about keeping this option alive. In her State of the County address last April, she called for "a small transfer fee on the top 1%" of real estate holdings in the county, estimating such a tax would generate $1 billion in revenue. More recently, she stated that a ballot measure to tax "mansions worth five or ten million dollars or more" remains on the table as a policy option that "should be made by local voters, not politicians in Sacramento."

This language directly mirrors the Los Angeles Measure ULA structure, which voters passed in November 2022 and which took effect in April 2023. LA's mansion tax imposes:

• 4% tax on property sales between $5 million and $10 million
• 5.5% tax on property sales above $10 million

If San Diego County were to adopt a similar structure, the financial impact on luxury sellers would be severe:

Unlike the canceled broad transfer tax proposal, which would have required state legislative approval, a mansion tax ballot measure could be placed before San Diego County voters through the county's local initiative process. This means Lawson-Remer and her allies could potentially bypass Sacramento entirely and take the proposal directly to voters—a pathway that significantly increases the likelihood of implementation.

The Los Angeles experience provides a cautionary tale for what could happen if San Diego follows suit. While LA officials projected their mansion tax would raise $672 million annually, actual revenue in the first year came in at just over $215 million—a 68% shortfall. Data from Realtor.com showed that 138 sales on homes valued over $5 million occurred in Los Angeles just before the tax took effect in March 2023, but only two sales occurred in the following month. The market essentially froze as luxury sellers rushed to close before the deadline, then stopped selling entirely once the tax was in place.

Which Neighborhoods Face Mansion Tax Risk?

Not all San Diego County neighborhoods face equal exposure to a potential mansion tax. Properties valued at $5 million or more are heavily concentrated in specific coastal and inland luxury markets—meaning sellers in these areas face the greatest financial risk if Lawson-Remer's proposal moves forward.

The geographic concentration of mansion tax exposure creates an interesting political dynamic. These high-value neighborhoods represent a relatively small number of voters—making them an easier political target for progressive supervisors seeking new revenue. At the same time, these are the communities that generate substantial property tax revenue and economic activity for the county, meaning any market disruption could have broader fiscal consequences beyond just transfer tax revenue.

Timing Strategy: Should Luxury Sellers Exit Before Mansion Tax?

For owners of properties valued at $5 million or more in La Jolla, Rancho Santa Fe, Point Loma, and other luxury markets, the mansion tax threat creates a genuine strategic dilemma: Should you sell now while transfer taxes remain at historical lows, or wait and hope the proposal never materializes?

The decision tree is complex because the timeline remains completely uncertain. Lawson-Remer has made clear the mansion tax remains a policy option, but she hasn't announced when—or even if—the Board of Supervisors will place it on a ballot. That could happen in November 2026, in 2027, or potentially never if political winds shift or budget pressures ease.

This uncertainty creates what economists call "option value"—the value of waiting to see how events unfold before making an irreversible decision. If you sell now and the mansion tax never passes, you've potentially given up appreciation and sold prematurely. But if you wait and the tax does pass, you could face hundreds of thousands of dollars in additional transfer costs.

Let's walk through a realistic scenario for an $8 million Point Loma estate owner:

In this scenario, waiting for 3% appreciation but then facing a 4% mansion tax results in $101,864 less in net proceeds than selling immediately—even accounting for the price increase.

The math gets even worse for properties above $10 million that would face the higher 5.5% mansion tax tier. A $12 million Rancho Santa Fe estate that appreciates to $12.36 million over one year would still net approximately $200,000 less after the mansion tax compared to selling immediately.

Of course, these calculations assume the mansion tax will definitely pass—an outcome that's far from certain. San Diego County voters have historically been more moderate than Los Angeles or San Francisco voters on tax issues, and real estate industry groups would likely mount significant opposition to any mansion tax ballot measure.

But here's the critical insight: The financial asymmetry strongly favors proactive selling for luxury homeowners who were already considering a sale in the next 2-3 years. If you're planning to downsize, relocate, or liquidate real estate assets anyway, the risk-reward calculation clearly favors moving before any potential mansion tax implementation.

This is particularly true for estate planning purposes. If you're over 65 and considering how to transfer wealth to the next generation, a sale now followed by gifting or trust strategies allows you to maximize net asset transfer. Waiting and potentially facing $500,000+ in mansion tax costs directly reduces the inheritance available to your beneficiaries.

How Cash Buyers Solve the Transfer Tax Timing Problem

For luxury homeowners facing transfer tax uncertainty, cash buyers offer a unique solution that traditional real estate transactions simply cannot match: speed and certainty.

The average traditional home sale in San Diego takes 30 to 45 days to close, with many transactions extending to 60 or even 90 days when complications arise with financing, appraisals, or inspections. This extended timeline creates exposure to political developments—if a mansion tax ballot measure is announced and scheduled while your home is in escrow, you could find yourself locked into a sale that closes after the tax takes effect.

Cash buyers eliminate this timeline risk entirely. According to multiple San Diego cash buyer companies, most cash sales close in 7 to 14 days, with some transactions completing in as little as 7 to 10 days. This rapid closing timeline offers several strategic advantages:

• Guaranteed closing date: When you accept a cash offer, you can choose your exact closing date and have certainty it will happen. There's no risk that the buyer's financing will fall through, that the appraisal will come in low, or that inspection issues will delay the transaction.
• No contingencies: Cash buyers typically purchase properties as-is, without financing contingencies, appraisal contingencies, or extensive inspection contingencies that could extend the timeline or kill the deal.
• Flexibility for tax timing: If you're strategically planning around capital gains tax implications, estate planning deadlines, or potential transfer tax changes, the ability to close within 7-14 days gives you precise control over timing.
• Speed premium vs. market uncertainty: While cash offers typically come in at 85-95% of retail market value, that "discount" may actually represent a significant premium when compared to selling after a 4% or 5.5% mansion tax takes effect.

Consider this example:

In this scenario, the cash buyer approach actually delivers $117,660 more in net proceeds despite the lower gross sale price—purely because it avoids the mansion tax and eliminates real estate commissions.

Political Landscape: Will Mansion Tax Actually Happen?

Understanding whether San Diego County will actually implement a mansion tax requires analyzing the political dynamics, voter sentiment, and fiscal pressures shaping the debate.

Board Chair Terra Lawson-Remer represents District 3, which includes coastal communities like Encinitas, Solana Beach, and Del Mar—areas with significant luxury home inventory that would be directly affected by a mansion tax. Her progressive policy positions and explicit support for wealth taxation suggest she's serious about pursuing this revenue option, not just floating a trial balloon.

However, Lawson-Remer can't unilaterally implement a mansion tax. Any such measure would require either a majority vote of the five-member Board of Supervisors to place it on the ballot, or a citizen initiative campaign to gather sufficient signatures. The current Board composition includes three Democrats (Lawson-Remer, Monica Montgomery Steppe, and Nora Vargas) and two Republicans (Jim Desmond and Joel Anderson), suggesting a 3-2 majority could potentially advance a ballot measure.

Voter sentiment remains the ultimate wildcard. San Diego County voters have historically been more moderate on tax issues than their counterparts in San Francisco or Los Angeles. Recent polling on affordable housing funding shows mixed results, with voters expressing support for addressing the housing crisis but skepticism about new taxes as the solution.

The Los Angeles experience with Measure ULA offers both encouragement and caution for mansion tax proponents. LA voters approved the measure with 57.8% support in November 2022—but that was during a different economic and political climate. Since implementation, the tax has faced significant criticism for:

• Falling 68% short of revenue projections ($215 million vs. $672 million expected)
• Causing luxury home sales to plummet (138 sales the month before implementation, just 2 sales the month after)
• Driving wealthy sellers to relocate to neighboring cities exempt from the tax (Beverly Hills, Malibu, Calabasas)
• Creating market distortions and reducing overall real estate transaction volume

Real estate industry groups, including the California Association of Realtors (CAR) and the San Diego Association of Realtors (SDAR), would almost certainly mount aggressive opposition to any San Diego County mansion tax ballot measure. These organizations have substantial financial resources and proven track records of influencing California real estate policy debates.

The timeline for any potential ballot measure remains completely uncertain. Lawson-Remer could push for placement on the November 2026 ballot, wait until 2027 or 2028, or decide not to pursue the measure at all depending on how county budget negotiations unfold and whether alternative revenue sources emerge.

For luxury homeowners, this political uncertainty creates a window—but not a guarantee—to sell before any mansion tax takes effect. If you're already planning to sell within the next 2-3 years, the smart bet is to move proactively rather than wait and hope the measure never materializes.

Conclusion: Relief Now, Uncertainty Ahead

The cancellation of San Diego County's broad transfer tax increase represents a significant victory for homeowners across all price ranges. The proposed 55-fold increase would have added $60,200 to the sale of a median $985,000 home—a devastating cost that would have fundamentally altered the economics of selling real estate in San Diego County.

Thanks to public pressure and transparency, that threat has been eliminated for now. Sellers can proceed with confidence that the baseline 55-cent per $500 transfer tax remains in place, preserving their net proceeds and making home sales financially viable.

But for luxury property owners in La Jolla, Rancho Santa Fe, Point Loma, Coronado, and Del Mar, the relief is incomplete. Board Chair Terra Lawson-Remer's explicit statement that a mansion tax for properties worth $5 million to $10 million or more "remains on the table as a policy option" creates ongoing uncertainty about future tax exposure.

The Los Angeles experience demonstrates that mansion taxes aren't just political rhetoric—they're real policies being implemented across California, with severe financial consequences for luxury sellers. A 4% tax on a $8 million property represents $320,000 in additional costs. A 5.5% tax on a $12 million estate equals $660,000 extracted from the seller's net proceeds.

For homeowners already considering selling luxury properties in the next few years, the strategic calculus strongly favors proactive action. The timeline for any potential ballot measure remains unknown, but the risk of facing hundreds of thousands in additional transfer taxes is real and growing.

Cash buyers offer a compelling solution to this timing uncertainty. With closing timelines of just 7 to 14 days and no financing contingencies, cash sales provide guaranteed exits that eliminate exposure to political developments. While cash offers typically come in below retail market value, the speed and certainty premium becomes extremely valuable when weighed against the risk of a 4% or 5.5% mansion tax on the gross sale price.

Whether you own a $2.8 million home in La Jolla or a $12 million estate in Rancho Santa Fe, now is the time to evaluate your options, understand your tax exposure, and make informed decisions about timing. The window to sell under current transfer tax rates is open—but for how long remains anyone's guess.

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