The Santa Barbara City Council is considering a proposal to impose a new transfer tax on high-value property sales as the City looks for ways to address a growing budget gap.
Under the proposal, property sales above $3 million would be subject to an additional transfer tax. City officials say the measure could generate an estimated $5 million to $6 million annually.
Financial projections presented to the council show the revenue could help stabilize city finances as transfer tax income has declined in recent years.
During the post-pandemic housing boom, Santa Barbara collected about $13 million in property transfer tax revenue. That figure has since leveled off to roughly $5 million to $6 million per year.
City staff says the proposed tax would affect a relatively small share of property sales. According to city data, about 89% of homes sold in Santa Barbara are priced under $3 million, meaning roughly 11% of transactions would be subject to the higher tax.
Still, some homeowners say they are concerned about the possibility of additional costs.
“Well, I think anytime anyone brings up additional taxes and expenses we have, it’s very discouraging to think that folks want to give us more taxes,” said Jon Thomas, a Santa Barbara homeowner.
Council members also asked staff to explore a tiered tax structure rather than applying the tax only to properties sold above a single $3 million threshold.
Local real estate agents say the tax could influence where sellers choose to list their homes.
“Knowing that when they go to sell, they have to pay this tax, they could go right outside the city limits to Goleta and still enjoy the city,” said Steve Epstein, a Santa Barbara real estate agent.
Some residents say additional taxes could also affect long-term housing stability for families.
“I know Santa Barbara is beautiful and in high demand, but with the current taxes and the possibility of more being added, there’s a very good chance my children could be forced to sell,” Thomas said.
The City Council is expected to consider a formal resolution in June or July to place the measure on the November 2026 ballot.
