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.
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.]
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
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.
The transfer tax schedule was created by measure n in the 2010 election.
I believe you are correct about the inflation indexing.
From the argument in favor of measure N:
emphasis mine. Seems like this will affect more and more homeowners as time goes on.
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.
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.
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.
How much was for the house and how much for the view?
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”?
OK, I get it Rillion. Good thing I’m not a tax accountant!
Maybe this was a deal? Considering someone just paid $1k/psf for a redone SFH in LPH on Sutter Street a block off Gough.
Every once in a while something happens that makes me scratch my head.
UPDATE: Buyer Looking to Cash Out on a Banked Pacific Heights Home