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  • Recent Local Anti-Speculation Tax – Although Defeated Last November, The Proposed Law Is Expected to Return In a Form More Likely to Pass

Recent Local Anti-Speculation Tax – Although Defeated Last November, The Proposed Law Is Expected to Return In a Form More Likely to Pass

January 07, 2015

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Readers will recall that after a massive campaign of opposition by real estate interests, including the San Francisco Apartment Association, San Francisco voters last month rejected a ballot measure that would have imposed an additional transfer tax on the sale of existing residential properties of 2 units to 30 units within 5 years of purchase. In the case of a property held for less than a year, the additional transfer surcharge would have been as high as 24% of the value of the property. In the case of a property held longer, the additional transfer surcharge would have resulted in lower percentages.

Supervisor Mar’s proposal was designed to discourage the kind of investors that he and tenant activists believe are driving the increased number of evictions in San Francisco by flipping rental properties or by turning them into condominiums or tenancies in common.

This ballot measure failed to achieve approval by a majority of local voters, with 46% of the vote. However, some commenters were surprised by the amount of yes votes the ballot measure garnered and point to this as evidence of support for affordable housing measures.

Promoters of the defeated San Francisco ordinance are expected to  revise the legislation to make the chances of passage greater. Pollsters indicated that many voters did not like certain provisions: voters questioned why properties of more than 30 units were exempted; also, small property owners were concerned that it did not include an exemption for sales to family members, and that it  punishes those forced to move or sell a two unit building they own and live in because of a job change or a sudden change in family circumstances.

During the last session of the California State Senate, Senator Mark Leno almost succeeded in passing a bill (SB 1439) which would have allowed San Francisco to require that landlords hold a rental property for five years before taking it off the rental market. It would have required an amendment to the State’s Ellis Act, which provides that no local government can require a rental property owner to continue to offer his or her housing for rent. His attempt to so amend the State’s Ellis Act failed, but it was close enough a vote that one can expect another try.

For more information, please contact:

M. Brett Gladstone

415-995-5065 Direct Phone
415-995-3517 Fax

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