San Francisco’s luxury home sales boost city budget through transfer taxes

San Francisco’s luxury real estate market is providing a financial boost to the city’s budget through property transfer taxes, the San Francisco Standard reported. The influx of AI-driven money into the high-end housing market has led to more homes selling for prices above $10 million.

Since the passage of Proposition I in 2020, San Francisco has imposed a transfer tax rate of 5.5% on properties sold between $10 million and $25 million, which is among the highest rates in the country. This rate is more than double the 2.25% charged for properties sold between $5 million and $10 million.

While most eight-figure sales in the city are commercial properties, an increasing number of residential homes are entering this price bracket. This trend is strengthening a traditionally volatile source of tax revenue for San Francisco.

The commercial property market downtown, particularly office buildings, saw a sharp decline in value during the pandemic and is only slowly recovering. In contrast, the residential market is experiencing fierce competition among buyers, pushing prices higher and generating more tax revenue for the city.