San Diego County Cancels 5,500% Transfer Tax Hike: What Sellers Need to Know

The Numbers Behind the Cancelled Proposal: A $60,000 Tax Bomb

To understand the magnitude of what was narrowly avoided, it's essential to examine the specific financial impact the proposed transfer tax would have had on San Diego homeowners across different price points.

Under California's current structure, all counties maintain a base transfer tax rate of $1.10 per $1,000 in property value (equivalent to $0.55 per $500). San Diego County currently adheres to this standard rate for properties in unincorporated areas. The proposed change would have increased this to $30.55 per $500—a 55-fold increase that would have fundamentally altered the economics of selling real estate in San Diego County.

Here's how the proposed tax would have compared to current rates across different property values:

For perspective, on a $985,000 home—the approximate median price in San Diego County according to recent market data—the current transfer tax of $1,083.50 represents about 0.11% of the sale price. The proposed tax of $60,187 would have represented 6.11% of the sale price, approaching the typical real estate commission rates that sellers already pay.

The draft contract obtained by Voice of San Diego revealed that the proposal included provisions for inflation adjustments and differentiated rates for various property types, including potential higher rates for second homes and investment properties. This would have created an even more complex and burdensome tax structure for San Diego sellers.

For unincorporated areas like Alpine, where median home prices typically range from $700,000 to $950,000, the proposed tax would have added $42,700 to $58,025 to each sale. In Ramona, with median prices around $650,000 to $850,000, sellers would have faced an additional $39,650 to $51,935 in transfer taxes.

Why the Proposal Was Cancelled: Transparency Wins

The rapid reversal of San Diego County's transfer tax proposal offers important insights into how local government tax initiatives can be derailed when subjected to public scrutiny.

According to reporting from both the San Diego Union-Tribune and Voice of San Diego, the proposal was developed by a subcommittee overseen by Democratic Supervisors Terra Lawson-Remer and Monica Montgomery Steppe. This subcommittee operated largely out of public view, drafting the lobbyist contract without widespread public knowledge or input.

The timeline of events reveals how quickly the situation changed once transparency was introduced:

• December 18, 2025: County issued a request for quotes seeking lobbyists to advocate in Sacramento for authority to raise transfer taxes
• December 22, 2025: Quotes from potential lobbyists were due
• January 1, 2026: The lobbying contract was scheduled to begin
• Early January 2026: Supervisor Jim Desmond learned of the proposal and criticized it publicly on social media
• January 7, 2026: County cancelled the request for quotes, citing a desire to "explore different options"
• January 9, 2026: San Diego Union-Tribune published detailed reporting on the cancelled proposal

Supervisor Desmond characterized the cancellation as "a win for transparency," noting in his statement that "once the quiet effort to raise taxes and add new taxes was brought to light, the right outcome followed." He argued that the county has adequate resources without imposing additional tax burdens on residents.

County spokesperson Tammy Glenn stated that the request was cancelled to "explore different options," but did not provide specific details about what those alternative options might entail. This ambiguous language has left many observers wondering whether the county has truly abandoned the idea or is simply regrouping to pursue a different strategy.

The cancellation demonstrates the importance of public awareness in local tax policy decisions. Had the proposal advanced through the legislative process in Sacramento without public attention, San Diego homeowners might have faced a ballot measure in November 2026 before fully understanding its implications.

Current Transfer Tax Rates: What San Diego Sellers Actually Pay Today

Understanding the current transfer tax landscape in San Diego County is essential for homeowners planning to sell in 2026 and beyond. Unlike some California counties that have passed local measures increasing transfer taxes, San Diego County maintains the state's base rate—at least for now.

California has a relatively straightforward transfer tax structure at the county level. All 58 California counties have the same base transfer tax rate of $1.10 per $1,000 of property value, as established by California's Revenue and Taxation Code. This rate is commonly expressed as $0.55 per $500, as transfer tax calculations are traditionally done in $500 increments.

However, the total transfer tax burden can vary significantly depending on where the property is located, because individual cities within counties can add their own transfer taxes on top of the county rate. Here's how San Diego County compares to other major California markets:

Transfer Tax Comparison: California Counties and Cities (2026)

*San Francisco rates vary based on property value, with higher-priced properties paying significantly more

As this comparison shows, San Diego County currently maintains one of the most seller-friendly transfer tax environments among California's major metropolitan areas. Cities like San Francisco, Oakland, and Berkeley have implemented substantial additional transfer taxes, often with progressive rate structures that significantly increase costs for higher-value properties.

For San Diego sellers, the current rate means that on a $750,000 home sale in Pacific Beach, you'll pay $825 in county transfer tax. On a $1.5 million home in La Jolla, the transfer tax is $1,650. On a $5 million luxury property in Del Mar, the transfer tax totals $5,500.

These relatively modest transfer tax costs in San Diego stand in stark contrast to what sellers would have faced under the cancelled proposal, and what sellers in other California markets already pay today.

What the Cancellation Means for San Diego Homeowners in 2026

The cancellation of San Diego County's transfer tax proposal creates several important implications for homeowners across different segments of the market, particularly those who have been considering selling but waiting for greater clarity on costs and regulations.

For Typical Homeowners ($500K-$2M Properties)

Homeowners in San Diego's core neighborhoods—including Pacific Beach, La Jolla, Mission Beach, North Park, South Park, Hillcrest, Point Loma, and Clairemont—have received welcome news. The cancellation means that anyone selling in 2026 will face only the standard $1.10 per $1,000 transfer tax, avoiding the potential $40,000 to $100,000+ in additional taxes that would have applied to properties in this price range.

For sellers who delayed listing their homes due to uncertainty about pending tax changes, this creates a strategic opportunity. The current transfer tax environment is clear and predictable, at least through the end of 2026. Any future ballot measure would likely not appear until November 2026 at the earliest, and would likely not take effect until 2027, giving sellers a substantial window of certainty.

For Luxury Property Owners ($5M-$10M+ Properties)

The situation is more complex for luxury property owners in premium areas like La Jolla, Del Mar, Rancho Santa Fe, and coastal Encinitas. Board Chair Terra Lawson-Remer has explicitly stated that a ballot measure targeting "mansions worth five or ten million dollars or more" remains under consideration as a policy option to address county budget challenges.

This creates potential urgency for luxury sellers. According to research from Luxury SoCal Realty, properties above $5 million in La Jolla face a 40% failure rate and spend an average of 78 days on market. The luxury market requires time to find qualified buyers and complete transactions. If a ballot measure targeting high-value properties appears in November 2026 and passes with a January 2027 effective date, luxury sellers who wait until late 2026 or 2027 could face substantially higher transfer taxes. The California insurance crisis adds additional complexity for high-value property transactions.

Data from the San Diego luxury market shows that 68% of luxury buyers pay cash, and international buyers represent 35% of luxury purchases above $3 million. These buyers are often highly sensitive to transaction costs and tax implications, making any future transfer tax increase particularly impactful on luxury property marketability.

For Unincorporated Area Residents (Alpine, Ramona, Fallbrook, Valley Center)

Residents of unincorporated San Diego County areas were most directly in the crosshairs of the cancelled proposal, as county-level transfer taxes specifically affect properties outside city boundaries. Areas like Alpine, Ramona, Jamul, Julian, Valley Center, and Fallbrook would have borne the full brunt of the $60,000+ tax increase without any city-level governance having a voice in the decision. Understanding the California 2026 housing laws is essential for unincorporated area residents navigating regulatory changes.

For these homeowners, the cancellation provides particular relief. Median home prices in these areas range from $650,000 to $950,000, and many residents have held their properties for decades. The proposed transfer tax would have effectively imposed an unexpected 6% sale fee on top of all other transaction costs.

However, residents of these areas should remain vigilant, as county-level tax proposals specifically target unincorporated areas where county supervisors have direct authority.

Will the Transfer Tax Proposal Return? Reading the Political Tea Leaves

While San Diego County cancelled the immediate lobbying effort to secure state legislative authority for transfer tax increases, multiple indicators suggest that some form of transfer tax ballot measure remains likely in the near future.

Terra Lawson-Remer's Public Statements

The most significant indicator comes from Board Chair Terra Lawson-Remer herself. In her statement following the cancellation, she emphasized that "that's a decision that should be made by local voters, not politicians in Sacramento." This language is telling—she's not rejecting the concept of transfer tax increases, but rather the method of implementation.

Lawson-Remer has specifically mentioned targeting "mansions worth five or ten million dollars or more" as a policy option to address county budget challenges. This represents a strategic pivot from the broad-based transfer tax that would have affected all properties to a more politically palatable "mansion tax" focused exclusively on luxury properties.

The Los Angeles and San Francisco Model

This approach mirrors successful ballot measures in other California jurisdictions. Los Angeles implemented Measure ULA in 2023, which imposed a 4% transfer tax on properties selling for $5 million to $10 million, and a 5.5% transfer tax on properties above $10 million. San Francisco has maintained a progressive transfer tax structure for years, with rates reaching up to $28 per $1,000 for properties valued above $25 million. Similar to the Trump proposal to ban institutional investors, these measures target specific market segments to influence housing affordability.

These measures passed with voter approval by framing the issue as "luxury property owners" contributing to affordable housing funding, rather than broad-based tax increases affecting typical homeowners. Lawson-Remer's specific language about "mansions" suggests she's studying these models for potential application in San Diego County.

The 2026 Election Timeline

If county supervisors decide to pursue a ballot measure for November 2026, the timeline would look approximately as follows:

• Spring 2026: Drafting of ballot measure language and economic impact analysis
• Summer 2026: Collection of economic data and polling on voter sentiment
• July-August 2026: Final measure language submitted for November ballot
• September-November 2026: Campaign period with advocacy from both supporters and opponents
• November 2026: Voters decide on the measure
• January-February 2027: If passed, tax would likely take effect

This timeline means that luxury property owners have roughly 10-12 months of certainty under current transfer tax rates, but face potential changes beginning in 2027.

Recent Contract for Political Consultants

Notably, while the transfer tax lobbying contract was cancelled, the San Diego Union-Tribune reported on January 14, 2026, that San Diego County awarded a separate six-figure contract to campaign consultants, lobbyists, and pollsters for a potential countywide sales tax measure. This demonstrates that county supervisors remain actively pursuing revenue-raising options, even if the specific mechanism has shifted from transfer taxes to other alternatives.

What This Means for Sellers' Timing

For typical homeowners in the $500,000 to $2 million range, the risk of future transfer tax increases appears minimal based on Lawson-Remer's specific focus on "mansions." These sellers can proceed with confidence that their transaction costs will remain predictable, though understanding the capital gains tax implications remains important for sale timing decisions.

For luxury property owners with homes valued above $5 million, the calculus is different. The political will clearly exists for targeted luxury property transfer taxes, and the model has proven successful in other California markets. Sellers in this category who have been considering a sale should seriously evaluate completing transactions in 2026 before potential ballot measures create additional costs in 2027 and beyond.

Strategies to Minimize Transfer Tax Impact When Selling

While San Diego County's transfer tax rates remain at the standard California level for now, understanding legitimate strategies to minimize or avoid transfer taxes can save sellers significant money, particularly if future rate increases occur or for sellers in cities with additional transfer taxes.

Understanding Transfer Tax Exemptions

California's Revenue and Taxation Code provides several exemptions from documentary transfer tax that sellers should be aware of:

1. Transfers to Revocable Living Trusts: If you transfer property to your own revocable living trust where you remain the trustee and beneficiary, this transfer is typically exempt from transfer tax. This strategy doesn't help when ultimately selling to a third party, but can be useful for estate planning purposes.

2. Transfers Between Spouses: Transfers of property between spouses or to a former spouse as part of a divorce settlement are generally exempt from transfer tax under Revenue and Taxation Code Section 11927. This can be valuable during divorce proceedings when property is being reallocated between spouses.

3. Transfers to Secure Debt: Section 11921 provides an exemption for "any instrument in writing given to secure a debt," which applies to mortgages, deeds of trust, and even installment sale contracts in some circumstances.

4. Partnership and LLC Transfers: Transfers to entities taxed as partnerships are exempt from documentary transfer tax if the partnership is considered continuing for federal tax purposes. This can be useful for sellers who want to transfer property to LLCs or partnerships for business purposes, though it doesn't eliminate transfer tax on ultimate sale to outside buyers.

5. Gift Transfers: Gifts of property where no consideration is exchanged are generally not subject to transfer tax. However, this only applies to genuine gifts, not sales structured to appear as gifts.

Timing Your Sale to Avoid Regulatory Uncertainty

One of the most practical strategies for San Diego sellers in 2026 is simply timing your sale to occur during periods of regulatory certainty. The current environment—with the transfer tax proposal cancelled but no ballot measure yet proposed—represents a window of clarity.

For luxury property owners who have been considering selling, completing the transaction in 2026 before potential ballot measures provides certainty about costs. Given that luxury properties in La Jolla average 78 days on market and face a 40% failure rate for properties above $5 million, starting the sales process sooner rather than later becomes strategically important.

Consider Cash Buyers for Speed and Certainty

In an environment of potential regulatory changes, transaction speed and certainty take on added importance. Traditional home sales in San Diego take 45-80 days on average, involving listing periods, buyer mortgage approval, inspections, appraisals, and potential delays. Our comprehensive guide on cash vs traditional home sales provides detailed comparisons of both approaches.

Cash buyers can close transactions in 7-14 days, eliminating financing contingencies, appraisal requirements, and repair negotiations. This speed becomes particularly valuable if you're trying to close a sale before a potential ballot measure passes or before a tax rate increase takes effect.

For example, if a ballot measure were to pass in November 2026 with a January 1, 2027 effective date, sellers who begin the traditional listing process in October might not close until December or potentially after the new year—potentially subjecting themselves to higher transfer taxes. Cash sales that close in 7-14 days provide a much higher degree of certainty about which tax rates will apply. Learn more about how long it takes to sell a house in San Diego using different sale methods.

According to HomeLight's analysis of cash offers, cash sales are significantly less likely to fall through compared to offers reliant on mortgage financing, reducing the risk of a failed sale that pushes your closing date into a period of higher taxes.

Working with Professionals Who Understand Tax Implications

Whether you're selling through traditional listing or exploring cash offers, working with real estate professionals who understand the tax implications of timing and structuring is essential. A qualified real estate attorney can advise on whether any exemptions apply to your situation, while experienced agents and cash buyers can help you navigate the timing considerations.

Frequently Asked Questions About San Diego Transfer Taxes