How much is the San Francisco transfer tax and who pays it?

San Francisco charges a documentary transfer tax when real property is transferred. By local custom, the seller typically pays the tax on residential transactions, though the responsibility can be negotiated in the purchase agreement. The tax rate is tiered based on the sale price and is collected at closing by escrow or title.

Do sellers in San Francisco pay for escrow and title fees?

In most San Francisco residential transactions, buyers pay escrow and title insurance fees, while sellers pay the city transfer tax and their brokerage commission. Final responsibility for fees is always determined by the purchase agreement.

How long does it typically take to sell a home in San Francisco?

Market time varies by neighborhood, price point, and condition, but well-priced homes in desirable San Francisco neighborhoods often sell within a few weeks. Homes that are properly prepared and priced according to current buyer demand tend to move more quickly.

Should I make repairs or upgrades before selling my home?

Not all upgrades deliver the same return. Buyers tend to respond most strongly to homes that are clean, well-maintained, and thoughtfully presented. Strategic preparation depends on location, layout, and the competitive landscape, which is why sellers often benefit from a customized preparation plan rather than a one-size-fits-all approach.

How is a home priced in the San Francisco market?

Pricing is typically based on recent comparable sales, current buyer demand, micro-location factors, and how similar homes are positioned in the market. In San Francisco, pricing strategy often reflects buyer psychology as much as raw data, especially in competitive neighborhoods.

step up in basis real estate - date of death appraisal real estate

What Is Step-Up in Basis? A Practical Guide for San Francisco and Marin Homeowners

Step-up in basis resets the value of inherited real estate to its fair market value at the date of death. This reduces potential capital gains when the property is sold. A date-of-death appraisal is used to establish that value, and the final sale price can serve as strong supporting evidence if the property is sold shortly after. The closer the sale price is to the appraised value, the less taxable gain there may be.

What Is Step-Up in Basis

Step-up in basis is a tax concept that applies when someone inherits property.

Instead of inheriting the original purchase price of a home, the heir receives a new tax basis equal to the fair market value at the date of death.

This matters because capital gains are calculated based on the difference between the sale price and the basis.

A simplified example:

Original purchase price: $300,000
Value at date of death: $2,000,000
Sale price: $2,100,000

In this case, the taxable gain is based on the difference between $2,100,000 and $2,000,000, not the original $300,000 purchase price.

Why the Date-of-Death Appraisal Matters

The step-up in basis is not arbitrary. It must be supported by fair market value.

That is where the date-of-death appraisal comes in.

A qualified appraiser evaluates the property based on:

Comparable sales at the time
Condition of the home
Market conditions

This appraisal becomes the foundation for the new basis.

If the valuation is too low, heirs may pay more in capital gains than necessary.

If it is too high and not supported, it may be challenged.

The goal is not simply to maximize the number, but to establish a value that is defensible and accurate.

A Real-World Example

In a recent sale, a property held in trust received two different date-of-death appraisals:

First appraisal: $1,500,000
Second appraisal: $2,200,000

The home was then brought to market and sold two months later for $2,600,000, after receiving 14 offers, including multiple offers at the final price.

This is where the distinction between appraisal and market evidence becomes important.

The appraisals were opinions of value at a point in time.

The sale represented actual buyer behavior in an open market.

With multiple buyers independently arriving at the same price, the $2,600,000 outcome becomes strong evidence of what the market was willing to pay.

How the Sale Relates to Step-Up in Basis

The key question in step-up in basis is:

What was the fair market value at the date of death?

A sale shortly after that date can help answer that question.

In the example above:

The $1.5M appraisal would be difficult to reconcile with the actual sale
The $2.2M appraisal is closer, but still below market response
The $2.6M sale, supported by multiple offers, provides real-world validation of value

Tax professionals will ultimately determine how these pieces fit together. But from a market standpoint, the sale becomes one of the most relevant data points.

Why This Matters for Sellers and Heirs

For families selling inherited property, the difference between valuations can be significant.

A lower basis can result in:

Higher taxable gains
Larger tax liability

A well-supported basis, aligned with market value, can reduce that burden.

This is why both the appraisal and the eventual sale matter. They work together to establish a clear picture of value.

The Role of Market Exposure

One point that is often overlooked is how important proper market exposure is.

A home that is:

Well-prepared
Properly priced
Fully exposed to the market

Will produce a more reliable indication of value.

In contrast, a limited or poorly executed sale may not reflect true market conditions.

In the example above, the number of offers and the convergence at a specific price point created a clear signal of demand.

A Practical Way to Think About It

Step-up in basis is not just a tax concept. It is a question of value.

What was the home worth at a specific moment in time?

The appraisal provides one answer.

The market, when properly engaged, provides another.

When those align, the outcome is clear. When they do not, the details matter.

Final Thoughts

If you are handling the sale of an inherited property, it is important to understand how valuation, timing, and market exposure all interact.

While tax professionals determine the final treatment, the way a home is brought to market can play a meaningful role in establishing value.

If you are navigating this process, I am always available to walk through how your property would likely be received in today’s market.

Have Questions About Your Property? Let’s Talk

Get In Touch

Oliver Burgelman

Vanguard Properties

415.244.5846

[email protected]

*This information is provided for general educational purposes. For tax advice specific to your situation, consult with a CPA or qualified tax professional.