If you’re selling your Redondo Beach home, you might have questions about transfer taxes. How do they work? How much are they? Who pays for them? Don’t worry. Transfer taxes aren’t complicated, and HomeLight is here to help.
Transfer taxes are fees levied by local or state authorities when real property (like a home) changes ownership. Transfer tax rates can differ significantly based on location and can have a big impact on the overall cost of your transaction and your bottom line.
This guide will explain how transfer taxes work in Redondo Beach, including their cost, who is liable for them, and any possible exemptions. Additionally, we will explain how transfer taxes can affect your capital gains burden and why working with a real estate agent is a great idea.
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What are transfer taxes?
Real estate transfer taxes are charged by state or local governments when property ownership is transferred from one individual to another.
According to the Federal Trade Commission, these taxes are due when the title to a property, essentially the document that verifies your legal ownership, is officially transferred to a new owner. This can occur through sales, inheritance, or gifting of property.
The amount owed in transfer taxes can vary significantly based on the property’s location, as different states, counties, and cities establish their own rates and regulations. Transfer taxes primarily serve as a revenue source for local and state governments, funding various public services and infrastructure projects.
Who pays for transfer taxes?
In Los Angeles County and Redondo Beach, sellers are responsible for paying any applicable transfer tax fees.
What are the types of transfer taxes?
Transfer taxes typically vary according to local regulations but can generally be categorized into three types: state, city, and county. Here’s a brief overview of how it works in Redondo Beach.
State transfer taxes
In California, a documentary transfer tax of $0.55 per $500 of the property’s sales price is applied to any non-exempt real estate transaction. Additional taxes may apply depending on your specific location within the state.
County transfer taxes
In Los Angeles County, there are five additional special tax rates, depending on whether you are located in Culver City, Los Angeles, Pomona, Redondo Beach, or Santa Beach and whether your property changed hands before March or April 2023.
Since Redondo Beach is located in Los Angeles County, the transfer tax rate is $1.10 per $1,000 of the property’s sales price.
City transfer taxes
The city transfer tax rate in Redondo Beach is $2.20 per $1,000 of the property’s sales price.
Other transfer fees
Beyond transfer taxes, there may be additional fees to consider, such as those from a homeowner’s association or local neighborhood organization. Since these can vary widely based on location, consulting a professional is advisable.
If you’re selling your home without a realtor, seeking professional advice can clarify the process and provide a better understanding of what to expect regarding the pros and cons of selling a house without a realtor.
Are transfer taxes deductible?
Transfer taxes are, unfortunately, not eligible for tax deduction.
However, you might be able to lower the amount you pay in capital gains taxes.
Capital gains, defined as the profit obtained from the sale of your home or the financial gain from selling your property, are subject to federal taxation just like profits from the sale of other assets.
According to the IRS, sellers can treat paid transfer taxes as selling costs, subtracting them from their home’s closing sale price. This allows them to minimize the capital gains taxes owed on any profit earned.
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