Originally listed for $12,500,000 in mid-October prior to being “modified” to $10,950,000 after a week on the market, the sale of 2755 Fillmore has closed escrow with a reported contract price of $9,999,998.

While the $9,999,998 sale price might seem a bit odd to some, keep in mind that a sale at $10,000,000 would have increased the transfer tax for the transaction by $50,000 (from $200,000 to $250,000) as the transfer tax rate jumps by 25 percent for sales of $10,000,000 or more.

And while a 25 percent jump in the transfer tax rate might seem stiff, it’s nothing compared to the 167 percent jump in the rate for sales as soon as they hit the $5,000,000 mark.

13 thoughts on “2755 Fillmore Sells for $9,999,998 and the Likely Reason Why”
  1. So it is a flat rate tax within bands, not a marginal rate? Perhaps the city should take a look at the IRS, or there will be a lot more sales like this.
    [Editor’s Note: That’s correct.]

  2. Why in this day of fancy pocket calculators and personal computers equipped with floppy disks and such can we not compute a smooth curve for sales price vs. transfer tax ?
    With that huge jump at $5M it seems likely that there will also be a cluster of sales just below that and nothing between $5M and $5.1M

  3. From the Assessor’s website:
    What is the Transfer Tax Rate for the City and County of San Francisco? If entire value or consideration is:
    More than $100 but less than or equal to $250,000, the tax rate is $2.50 for each $500 or portion thereof;
    More than $250 but less than $1,000,000, the tax rate is $3.40 for each $500 or portion thereof;
    $1,000,000 or more but less than $5,000,000, the tax rate is $3.75 for each $500 or portion thereof;
    $5,000,000 or more but less than $10,000,000, the tax rate is $10.00 for each $500 or portion thereof;
    $10,000,000 or more, the tax rate is $12.50 for each $500 or portion thereof.
    My point is I doubt this was indexed to inflation as the levels are absolute round numbers. This may become more of a burden in the future.

  4. From the argument in favor of measure N:

    “…Proposition N will help fund vital city services when the largest downtown office buildings are bought and sold. It will NOT impact homeowners or small property owners.”

    emphasis mine. Seems like this will affect more and more homeowners as time goes on.

  5. If my condo that I bought for less than $500,000 ever inflates to $5 million, I’ll be happy to pay the extra $25,000 that prop N raised the transfer tax and would even say it didn’t impact me. Prop N raised it from 1.5% to 2%, it did not change the rates for properites below $5 million.

  6. Rillion – I think that the extra you’d need to pay if the sales price were 4,999,999 vs 5,000,000 is closer to $62,500, not 25,000. Maybe I got the math wrong though. lessee …
    $5,000,000 is 10,000 $500 bills
    If sold for $4,999,999 and taxed at $3.75 for each $500 (the $1-5M rate), that’s $37,500
    If sold fort $5M and taxed at $10 for each $500 (the $5-10M rate), that’s $100,000
    difference is $62,500 extra paid in taxes for receiving $1 more in sales price.
    Even rich people don’t mind receiving an extra $60K.
    By the way, why on earth does the assessor express the payment in terms of “for each $500 or portion thereof” instead of just a simple percentage? Yeah, there are little differences depending on how close the actual sales price is to a multiple of $500, but come on assessor. At least use a cash chunk that is a power of ten.

  7. From my earlier post, I suggested this would have a hard time selling over $10m…. Just saying. 🙂
    This is a pretty good outcome for this property and its hard to price these homes. Not sure I would have gone with such a high ask; but the strategy worked none-the-less and nabbed a buyer at $10m (plus or minus $2 🙂
    A sincere congrats to all.

  8. Milkshake – You are completely ignoring that the transfer tax rate before Prop N was 1.5% for properties over $5mm. You specifically brought up Prop N, I specificially mentioned the effects of Prop N and the DIFFERENCE that resulted from Prop N.
    Difference in transfer tax between $4,999,999 sale and a $5mm sale before Prop N, $37,500. Difference in same sale after Prop N, $62,500. Difference between pre- and post-Prop N sale, $25,000.
    Was I not clear enough when I wrote “that prop N raised the transfer tax”?

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