City Council Okays Rates of Real Estate Transfer Tax Initiative
August 6, 2020
City Council this week approved the "fine-tuned" resolution to place an initiative on the November 3 ballot to increase the city's real property transfer tax (RETT) for sales above $1.5 million.
The tax measure was initially discussed by the Council last week in its effort to shore up the city's financial state "slammed by the pandemic induced recession." During a special meeting, Councilmembers expressed their support for the measure but also directed an ad hoc subcommittee to come up with tax rates that are "fair, less burdensome and won't adversely affect" the local community. RETT is the tax that is paid by the seller of commercial and residential properties.
At Monday's meeting, the Council reviewed and approved the tax rates proposed by the ad hoc subcommittee – composed of Vice Mayor Alex Fisch and Councilmember Thomas Small. Currently, the RETT in Culver City is .45% on real estate sales.
The subcommittee's proposal calls for the exemption of the first $1.5 millions of any real estate transaction, with increased marginal rates as follows:
Under $1.5 million: 0.45% (existing rate)
$1.5 million to $2,999,999: 1.5%
$3 million to $9,999,999: 3.0%
$10 million and up: 4.0%
Also exempted would be 100% of deed-restricted affordable housing and the first transfer of newly-constructed multi-family housing.
Vice Mayor Fisch, an early advocate of the RETT increase, said this proposed tax structure "preserves the city's existing RETT revenues while guaranteeing occasional higher-revenue years."
In his twitter account, Fisch explained that "RETT is a more efficient and fair tax than most because it taxes socially created wealth (mostly land prices) a single time when the taxpayer has money to pay... The net effect is that house flippers and large developments will pay the greatest portion of the tax and no one has to pay until they are cashing out of Culver City."