I got two URGENT RED ALERT emails this morning from the California Association of Realtors—of which I am a member (and the Realtor® Party, which I guess I fund out of my dues...?)—with a strident warning and call to action against AB 736.
The subject line said, "Dramatic Increase to Transfer Taxes." The math was scary: on a $930,000 median-priced home, a transfer tax could jump from roughly $1,000 today to as much as $27,900.
I sell real estate and consult with local governments on real property strategy and compliance. When I read the alert, then the bill text, then the support letters, I realized something the Red Alert didn't explain.
This is a "maybe" issue for cities and counties that don't already have a limit in place. The bill also includes a $10 billion affordable housing bond headed for the June ballot, which is why housing advocates support it despite the transfer tax language.
Calm Down CAR
AB 736 does not force any city or county to raise its transfer tax. It only sets a new ceiling. A city that currently charges $0.55 per $500 does not have to change anything under this bill. The 1.5 percent cap is a maximum, not a minimum.
The people who will pay more under AB 736 are limited to two groups. First, residents of cities that choose to raise their rates to the new ceiling. That is a political decision each city council makes, not something the bill requires. CAR argues the new ceiling creates a target that cash-strapped cities will find hard to ignore.
That is a prediction about future behavior, not a built-in feature of the bill. Second, sellers in charter cities with existing rates above 3 percent who might have seen those rates stay high. But those cities are already charging those rates and the bill grandfathers them. The practical impact there is more about preventing future increases than creating new ones.
Some Perspective
The honest answer is that AB 736's transfer tax provision is a permission slip, not a mandate. A city council cannot simply declare a new 1.5 percent rate. Under existing California law, raising a transfer tax requires voter approval, whether the ceiling is 0.11 percent or 1.5 percent.
CAR is arguing about what voters might choose at the ballot box.
The bill's supporters argue the cap prevents worse outcomes like the Howard Jarvis ballot measure or cities raising rates to 5.5 percent the way Los Angeles did with Measure ULA. Both sides are arguing about what cities will do, not what the bill forces them to do.
What AB 736 Does to Taxes in Alameda County: City by City
AB 736 caps combined local transfer taxes at 1.5 percent for general law cities, or up to 3 percent for charter cities with grandfathered general taxes in effect as of June 30, 2026. Properties over $5.4 million have no cap at all. Homes rebuilt after natural disasters are exempt for five years.
The baseline.
Every sale in Alameda County pays a state documentary transfer tax of $1.10 per $1,000. The county charges its own $0.55 per $500, effectively another $1.10 per $1,000. That county rate counts toward the cap. The city rate sits on top. AB 736 caps the combined local rate only.
Alameda (city).
City rate: $12 per $1,000 (1.20 percent). Combined with county: 1.31 percent. Under 1.5 percent. No impact.
Albany.
City rate: $15 per $1,000 (1.50 percent). Combined: 1.61 percent. This exceeds the 1.5 percent cap. AB 736 would force Albany to reduce its rate to comply. Albany is the city in Alameda County most likely to lose revenue.
Berkeley.
City rate is $15 per $1,000 (1.50 percent) for properties at or under $1.7 million and $25 per $1,000 (2.50 percent) above that threshold, per the City of Berkeley's transfer tax page. Combined with county: 1.61 percent or 2.61 percent. Berkeley is a charter city and the tax is a general tax in effect before June 30, 2026, so the grandfather clause applies.
The real impact hits Berkeley's Measure W, approved November 2024 and scheduled to take effect January 1, 2027. Measure W adds tiers up to 3.5 percent city rate for properties over roughly $3 million. The combined rate there would be 3.61 percent, exceeding the 3 percent grandfather cap. AB 736 would block those new tiers, leaving Berkeley stuck at current rates.
Emeryville.
City rate: $12 per $1,000 (1.20 percent) under $1 million, $15 per $1,000 (1.50 percent) from $1 million to $2 million, $25 per $1,000 (2.50 percent) above $2 million, per the county's fee schedule. Lower tiers sit at 1.31 percent and 1.61 percent combined. Emeryville is a charter city. If its taxes are general taxes in effect before June 30, 2026, the higher tiers are grandfathered. If they are special taxes, those tiers would need to be reduced.
Hayward.
City rate: $8.50 per $1,000 (0.85 percent). Combined: 0.96 percent. Well under 1.5 percent. No impact.
Oakland.
Oakland's tiered city rate is 1.0 percent under $300,000, 1.5 percent from $300,000 to $2 million, 1.75 percent from $2 million to $5 million, and 2.5 percent over $5 million. Combined rates range from 1.11 percent to 2.61 percent. Oakland is a charter city, and its higher tiers are grandfathered up to 3 percent.
The $5.4 million exception changes the math at the top. Oakland's top tier of 2.5 percent currently applies to any sale over $5 million. Under AB 736, single-family homes sold for $5.4 million or more would have no cap at all.
Piedmont.
City rate: $13 per $1,000 (1.30 percent). Combined: 1.41 percent. Under 1.5 percent. No impact.
San Leandro.
City rate: $11 per $1,000 (1.10 percent). Combined: 1.21 percent. Under 1.5 percent. No impact.
For Now
AB 736 was amended in the Senate on June 22 and ordered to second reading. Both houses are expected to vote as early as June 25. The bond component requires voter approval. The transfer tax component takes effect January 1, 2027, regardless of the bond's outcome.
But that cap is a ceiling; cities don’t have to do anything. Raising it still requires a vote of the people. Both sides are arguing about what cities will do, not what the bill forces them to do. That is worth remembering the next time a Red Alert hits your inbox.
