Transfer Taxes in Hillsborough Explained

Planning a sale or purchase in Hillsborough and wondering how transfer taxes affect your bottom line? You are not alone. Closing costs can be confusing, and transfer taxes are one line item you want to understand early. In this guide, you will learn what a documentary transfer tax is, how San Mateo County and nearby cities handle it, who typically pays, common exemptions, and how to budget with confidence. Let’s dive in.

What is a documentary transfer tax?

A documentary transfer tax is a tax on the transfer of real property. It is commonly called a transfer tax, deed transfer tax, or stamp tax. The tax is usually collected when the deed is recorded at the county.

Most jurisdictions express the tax as dollars per 1,000 dollars of the sale price. The basic formula is simple: transfer tax equals the sale price divided by 1,000, multiplied by the rate in dollars per 1,000. Some places express the rate as a percentage and the math works the same way.

Escrow or title handles collection at closing. The responsible party depends on local ordinance and what you negotiate in your purchase agreement.

County and city layers in San Mateo County

In San Mateo County, a county-level documentary transfer tax is applied when deeds are recorded in the county. You should confirm the current per-1,000 rate directly with the County Clerk-Recorder before you rely on a specific number.

Some municipalities in the county may also impose their own city-level transfer tax on top of the county tax. Practices vary by city. Where a city tax exists, it is commonly calculated the same way and collected at the same time as the county portion, but the municipal code will state who is liable and any exemptions.

What to know for Hillsborough

If you are buying or selling in the Town of Hillsborough, verify whether any town-level transfer tax applies to the property address. The Town Clerk or Finance Department can confirm current rules and who is designated to pay under the town ordinance. Because nearby cities can differ, it is smart to check if a property near a border falls under another municipality’s rules.

Who usually pays in local practice

Ordinances often name the seller as the liable party, but payment can be negotiated in the purchase contract. In many California residential deals, the seller commonly pays the county documentary transfer tax. If a city tax applies, sellers often pay that too. Practices can vary, and sometimes buyers and sellers split the cost or allocate it as part of other concessions. Escrow will follow your contract and any ordinance requirements.

Common exemptions and special situations

Several types of transfers are commonly exempt or partially exempt from documentary transfer tax, depending on local rules. Typical scenarios include:

• Transfers between spouses or registered domestic partners
• Transfers resulting from death, such as probate or distributions to beneficiaries
• Transfers into or out of a revocable trust where beneficial ownership does not change
• Certain parent and child transfers, depending on local provisions
• Transfers to certain nonprofit or government entities
• Gift transfers where no consideration is paid, noting that assuming a mortgage can count as consideration

Each exemption usually requires a specific affidavit or claim form at recording. Escrow or title will guide you and prepare the right paperwork when applicable.

Important: Transfer tax exemptions are different from property tax reassessment rules. For example, Proposition 19 changed some statewide reassessment exclusions. An exemption from documentary transfer tax does not guarantee a property tax reassessment exclusion. Verify both if relevant to your situation.

How to budget and calculate

The core calculation is consistent everywhere:

• Formula: transfer tax equals sale price divided by 1,000, multiplied by the rate in dollars per 1,000.

Here is an illustrative example to show the math. This is not a quote of current rates and is for demonstration only.

• Sale price: 2,000,000 dollars
• If a county rate is 1.10 dollars per 1,000 dollars, county tax equals 2,000 times 1.10 dollars, which is 2,200 dollars
• If an additional city rate is 3.00 dollars per 1,000 dollars, city tax equals 2,000 times 3.00 dollars, which is 6,000 dollars
• Total documentary transfer tax equals 8,200 dollars in this example

For sellers, transfer tax is one piece of your net proceeds. A simple snapshot for the same illustrative sale price might look like this:

• Sale price: 2,000,000 dollars
• Less: real estate commission, for example 5 percent equals 100,000 dollars
• Less: county plus city transfer taxes from the example equals 8,200 dollars
• Less: escrow or title fees, lien payoff, prorations, and other closing costs
• Estimated net equals sale price minus total deductions

Commissions and other closing charges often represent a larger share of deductions than transfer taxes in many Mid-Peninsula sales, but transfer tax still matters for accurate budgeting.

How escrow handles collection

Your escrow or title company will calculate the transfer tax once the sale price and property municipality are confirmed. If an exemption applies, escrow will prepare the required forms and collect any supporting documents. At recording, escrow pays the county and any city amounts due. If an exemption is discovered after closing, some jurisdictions allow corrected filings or refund requests, but rules and deadlines vary, so do not assume an automatic refund.

Verification checklist for Hillsborough closings

Use this quick list to confirm your numbers before you set budgets or make concessions:

• San Mateo County Clerk-Recorder: confirm the current county documentary transfer tax rate and procedure
• Town of Hillsborough Finance Department or Town Clerk: confirm whether the town levies a municipal transfer tax, the current rate, and who is liable
• Local title or escrow officer: request an estimated closing statement that shows transfer tax line items and any applicable exemptions
• Nearby municipalities: if the property is near a border, check the specific city’s finance office or municipal code for any city-level transfer tax
• Contract guidance: review standard forms and local practice for who typically pays, then confirm your allocation in the purchase agreement

Pro tips for buyers and sellers

• Verify early. Ask escrow for a transfer tax estimate as soon as price and municipality are known.
• Clarify payment in your offer. Make transfer tax payment explicit so there is no confusion at closing.
• Document exemptions. If you expect an exemption, gather supporting paperwork well before recording.
• Watch border effects. The city listed on the deed or APN jurisdiction can determine whether a municipal tax applies.
• Keep it in perspective. On high-value Peninsula sales, transfer tax is meaningful but often smaller than other line items, so plan holistically.

Work with a local advisor

Transfer taxes are straightforward once you know which layers apply and who pays. If you want a precise estimate for your Hillsborough purchase or sale, a local title officer and your agent can provide exact figures and help you structure a clean, predictable closing.

If you are planning a move in Hillsborough or elsewhere on the Mid-Peninsula, reach out for a confidential discussion about timing, strategy, and net proceeds planning. Contact Michael Warren Real Estate to receive exclusive listings or request a private consultation.

FAQs

What is a documentary transfer tax in San Mateo County?

• It is a tax on the transfer of real property collected at recording. It is calculated as dollars per 1,000 dollars of the sale price. Escrow collects and pays it at closing.

Does Hillsborough have its own city transfer tax?

• You should verify with the Town of Hillsborough Finance Department or Town Clerk. Some cities in San Mateo County levy a municipal transfer tax and others do not.

Who pays transfer taxes in a Hillsborough home sale?

• Ordinances often designate the seller as liable, but payment is negotiable in the purchase contract. Escrow will follow your agreement and any ordinance requirements.

Are any transfers exempt from transfer tax in San Mateo County?

• Common exemptions can include spousal or domestic partner transfers, transfers due to death, certain trust-related transfers, some parent-child transfers, and some nonprofit or government transfers. Each requires specific documentation.

How do I estimate transfer taxes before I list or make an offer?

• Ask a local title or escrow officer for an estimate once you know the sale price and municipality. They can also confirm any exemptions and who pays under local custom.