The most dreaded word in the English Vocabulary - TAX. Measure E was passed unanimously on March 3, 2020, although it did not go in effect until July 1, 2020, right during the onslaught of the Pandemic. Although, Measure E is not a new measure to the Real Estate Transaction, very few people understand the implications regarding buying property in San Jose, Ca. First, it is a San Jose ordinance, which is quite different than most ordinances. In most ordinary cases, this would be a county or state-wide measure, however, it is only affecting the properties in San Jose, Ca. Therefore, a buyer must be aware that they are penalized in the luxurious markets such as Willow Glen, Almaden Valley, Cambrian and other surrounding markets. At multiple occasions, we have represented buyers in those exclusive markets, that are subject to a San Jose Property Address, but are in particular markets like Willow Glen, thinking there is an exception since they say they live in Willow Glen, not San Jose. But the buyers have a San Jose address, subjecting them to the Measure E tax. These buyers are caught off guard by the ADDITIONAL TAX associated with their purchase.
So, what are the tax percentages per sales bracket? First, any sale $1,999,999 or under is not subject to this tax. Although that sounds like a bit of a relief, when the medium household price is $1.8 million in Santa Clara County, but exceeds $2 million in the markets above, a majority of the sale transactions will be subject to the Measure E Tax. Therefore, if you intend to purchase at a sales price of $2 million, be prepared to pay at the rates listed below:
To give you a simple example, a transfer of real property where the value of consideration is $11,000,000 would be taxed at a rate of 1.5% on the entire $11,000,000. The tax owed would be $165,000. Therefore, if you are plan to purchase in a market within the San Jose City Limits, please reach out to your trusted Real Estate Advisor for more clarification on this Tax.