California Legislature Passes Law to End Housing Tax Loophole
New Law Outlaws Practice of Concealing Home Prices
For many years, celebrities and wealthy residents have been using a loophole in the California tax code that allowed them to shield or evade disclosing the full purchase price of high-end homes.
Thankfully, this practice will cease thanks to new legislation from Reset San Francisco founder Assemblymember Phil Ting.
The California State Legislature unanimously passed bill AB-1888 intended to close the decades-old loophole by requiring the documentary transfer tax to always be filed onto the first page of a housing deed, thereby allowing the full-purchasing price of a home to be listed as public record.
While state law requires that homeowners file all taxes on the front page of deeds, homeowners could previously petition to have the taxes listed on another page, thereby removing the listing from public record.
This practice was used to prevent the public from knowing the true sales price of a home while protecting homeowner’s identities and expenditures if necessary.
“This bill would delete the requirement that, upon request, the amount of tax due be shown on a separate paper affixed to the document, and would make a conforming change to the signed declaration requirement.” – Assembly Bill No. 1888 Chapter 20
This legislation is a major win for areas such as Woodside, Atherton and Hillsborough, where missing transfer taxes are common.
For realtors in San Francisco, the process of appraising homes has been extremely difficult because of the unique nature of their location, size, and additional factors. Houses that had the documented transfer tax excluded from public record made it even harder for realtors to determine a correct appraisal in relation to surrounding listings.
Now that these taxes will be listed on every housing deed, relators will now be able to give their clients better appraisal quotes from publicly accessible records of neighboring homes.
This process will allow for a more efficient housing market here in San Francisco, benefiting both buyers and sellers.
Legislation like this is just one example of how representatives and leaders are working towards building a better community for San Francisco.