An improving real estate market may have helped close the budget gap before the Board of Supervisors passed the city’s most recent budget, according to Assessor-Recorder Phil Ting.
The Assessor-Recorder’s office announced Thursday that transfer tax revenue, generated when property changes hands, was over $83.7 million in the 2009-2010 fiscal year, and approximately $21.6 million of that was generated in June alone.
In comparison, about $49 million was generated by transfer taxes in the 2008-2009 fiscal year, and $6.5 million was generated in June alone.
The city controller originally projected that the city would only see $45 million in transfer taxes for the city’s coffers. But by the end of June, the Board of Supervisor’s had a $22.3 million surplus from transfer taxes that helped them close the budget gap at the end of the fiscal year.
“The largest driver of transfer taxes is the real estate market,” Ting said.
Ting said that a spike in transactions involving high-value property, like commercial property, is partially responsible for the increase in transfer tax revenue. The top 10 properties brought more than $13.6 million of the total $21.6 million collected in June, he said.
The increase in transfer taxes can also be attributed to a higher tax rate as a result of Proposition N, which bumped the transfer tax for real estate valued at more than $5 million from .75 percent to 1.5 percent, Ting said. Prop N was a November 2008 ballot measure that went into effect in 2009.
In the 2009-2010 fiscal year a total of 90 properties brought in $29 million in transfer taxes at the new rate. Without Prop N, those properties would have only generated only $14 million.
Ting said the office generated at least $1 million from discovering under-reported transfer taxes after the office’s close scrutiny of transfer tax payments.