Santa Cruz Measure C Transfer Tax: What Homebuyers and Sellers Need to Know (2026)
By EJ Pulpan, REALTOR® — Pulpan Brothers Group, Christie's International Real Estate Sereno, Los Gatos, CA
Santa Cruz homeowners and buyers have a new tax to understand starting this year. Measure C, officially the Workforce Housing Affordability Act of 2025, introduces a new property transfer tax in the City of Santa Cruz. Here's what you need to know before you buy or sell.
What Is Measure C?
Measure C is a ballot measure Santa Cruz voters approved in November 2025 to fund affordable housing and homelessness services. It created two new taxes:
- A real property transfer tax on higher-value home sales
- An annual parcel tax of $96 on most property owners
Both taxes took effect July 1, 2026, and are set to run for 20 years, through the 2046–2047 fiscal year.
How the Transfer Tax Works
The transfer tax only applies to property sales within Santa Cruz city limits priced above $1.8 million. If your sale price is under that threshold, the new tax doesn't apply to you. It's also on top of the city's existing base transfer tax ($0.55 per $1,000 of value), which still applies to every sale regardless of price.
Measure C uses a graduated (bracket) structure — the rate increases as the price climbs, but each rate only applies to the slice of value within that bracket:
The total tax is capped at $200,000 per transaction, no matter how high the sale price goes.
Example 1: A home sells for $2 million.
- Taxable amount: $2,000,000 − $1,800,000 = $200,000, all in the first bracket
- Tax owed: $200,000 × 0.5% = $1,000
Example 2: A property sells for $4 million.
- $1.8M–$2.5M bracket: $700,000 × 0.5% = $3,500
- $2.5M–$3.5M bracket: $1,000,000 × 1.0% = $10,000
- $3.5M–$4M bracket: $500,000 × 1.5% = $7,500
- Total Measure C tax: $21,000
The $1.8 million threshold and $200,000 cap both increase annually based on CPI, so these numbers will shift slightly each fiscal year.
How the Tax Is Collected
The Measure C transfer tax is collected the same way as other real estate transfer taxes in California: at closing, through escrow. The escrow or title company calculates the tax based on the final sale price, collects it as part of the closing costs, and remits it to the city when the deed is recorded with the county. Sellers don't need to file or pay this separately, it's built into the closing statement alongside the county's base transfer tax.
As with most California transfer taxes, responsibility for payment (buyer vs. seller) can be negotiated between the parties, but seller-paid is the local custom in Santa Cruz.
Who's Exempt?
Certain transfers are excluded from the tax, including:
- Gifts and inheritances
- Transfers between spouses or as part of divorce
- Transfers to or from exempt public entities or nonprofits
- Restricted affordable housing units
- Transfers through bankruptcy or deed in lieu of foreclosure
What About the Parcel Tax?
Separately, most Santa Cruz property owners now pay a flat $96 per year parcel tax, billed alongside regular property taxes starting with the 2026–2027 fiscal year. Homeowners may qualify for an exemption if the property is their primary residence and they meet income limits (60% or less of area median income, or 65+ and 80% or less of area median income).
What This Means for Sellers
If you're selling a property near or above the $1.8 million mark, factor this tax into your net proceeds early, not during escrow. It's an added cost on top of existing county and city transfer taxes, and it may affect how you price and negotiate near that threshold.
What This Means for Buyers
Because the tax is tied to sale price, it could influence negotiations on properties priced just above $1.8 million. Buyers and sellers alike should build this into their closing cost conversations from the start.
Feel free to call Maria Herr at First American Title as an additional resource, if needed.
Bottom Line
Measure C doesn't affect the vast majority of Santa Cruz home sales, the city's median home price is well below the $1.8 million threshold. But if you're buying or selling a higher-value property, it's a real cost to plan for.
Have questions about how Measure C could affect your sale or purchase? We, The Pulpan Brothers Group, can walk you through the numbers for your specific property.
