Transfer Taxes Set To Affect Those in Sacramento Region

Sacramento Mayor Kevin McCarty plans a 2026 ballot measure to create a new city transfer tax on real estate sales, expected to add an $8–9 million tax annually on properties. The tax is proposed to be used for housing programs such as tiny home communities, rental aid, and first-time buyer assistance.

Exact details of the transfer tax remain unclear, but the proposal sounds very similar to Los Angeles’ Measure ULA which has significantly slowed high-value commercial property transactions in Los Angeles. Industry data (NAI Capital) from Q3 2024 show year-over-year sales drops in LA of ~63% for industrial, ~45% for office, ~33% for retail and ~15% for multifamily in city limits, tied in part to Measure ULA. Measure ULA has caused such a major disruption in Los Angeles that a last-minute legislative measure was introduced this year, sponsored by L.A. Mayor Karen Bass, in an unprecedented move to significantly change the voter approved measure.

Additionally, the Sacramento Mayor noted that the measure would only need a majority vote threshold which implies it would be using the Upland Loophole which allows the measure to avoid a 2/3 vote of the electorate. This is the same strategy was used to pass Measure ULA – which not only makes it easier to pass the tax, it removed any incentive to get input from the business community and impacted property owners and tenants.

If you have properties in the City of Sacramento or are generally concerned about the growing use of the Upland Loophole to pass transfer taxes that are not fully vetted by local governments, you should get involved now to make sure council members understand the negative economic impacts of high transfer taxes. 

A similar effort has also been identified in San Diego, and it is expected that there will be more transfer tax pushes in cities and counties across the state in the 2026 election year. The Upland Loophole has shifted efforts from a statewide split-roll property tax to these local transfer taxes as they are much easier and inexpensive to enact through a local ballot effort.

More details from LAist

More detail from BizJournal

On the streets for signature now is a measure by the Howard Jarvis Taxpayers Association that would close that loophole and return all tax votes of this type to the 2/3s requirement. Get involved here.