As of July 1, 2026, selling a higher priced home within the City of Santa Cruz officially costs more. Measure C, the Workforce Housing Affordability Act passed by voters in November 2025, is now in effect, and it changes the math on certain real estate transactions in the city.
If you own a home here, are thinking about selling, or are shopping the Santa Cruz real estate market right now, here is the plain English version of what changed, who it affects, and (just as importantly) who it does not affect.
First, What Is a Transfer Tax?
A transfer tax is a one time fee charged when a property changes hands. California counties already collect a small documentary transfer tax on every sale, typically $1.10 per $1,000 of the sale price. That has not changed.
What is new is an additional city level transfer tax that applies only to sales inside Santa Cruz city limits, and only above a certain price point.
The New Rules, Broken Down Simply
Measure C created a graduated transfer tax on home sales over $1.8 million. Here is the part most people get wrong: the tax does not apply to the whole sale price. It only applies to the amount above $1.8 million, in tiers.
- 0.5% on the portion of the price between $1.8 million and $2.5 million
- 1% on the portion between $2.5 million and $3.5 million
- 1.5% on the portion between $3.5 million and $4.5 million
- 2% on anything above $4.5 million
The total tax is capped at $200,000 per transaction, and the $1.8 million threshold adjusts annually with inflation. Both taxes under Measure C are set to expire after the 2046 to 2047 fiscal year.
There Is Also a Parcel Tax
Measure C came with a second piece: a flat $96 annual parcel tax on properties within the City of Santa Cruz, which will appear on property tax bills starting with the 2026 to 2027 fiscal year. Exemptions exist for qualifying low income households and most older adults, though they require filing paperwork with the city, and landlords are prohibited from passing the parcel tax on to tenants.
The revenue from both taxes is earmarked for affordable housing development and homelessness prevention programs, with oversight and auditing requirements built in.
The Part Everyone in Aptos Should Read Twice
This tax applies only within Santa Cruz city limits. That is a big deal, and it is the detail we are explaining most often right now as realtors in Santa Cruz working across the whole county.
If your home is in Aptos, Capitola, Soquel, Scotts Valley, or the unincorporated parts of Santa Cruz County, Measure C does not apply to your sale. The Aptos real estate market, including luxury properties at Seascape, Rio Del Mar, and Day Valley, is completely outside the reach of this tax.
For sellers, that means an Aptos home and a comparable Santa Cruz city home at the same price point now have slightly different net proceeds. For luxury buyers weighing neighborhoods, it is one more data point in the Santa Cruz versus Aptos conversation. It should not drive your decision on its own, but it belongs on your spreadsheet.
What This Means for Sellers
If you are selling within Santa Cruz city limits above $1.8 million, this is now a line item on your closing statement, and it needs to be part of your net sheet from day one. Transfer taxes are customarily paid by the seller in our area, though like most closing costs, they can be negotiated.
Certain transfers are exempt, including gifts and inheritance, transfers of marital property, deed restricted affordable units, bankruptcy proceedings, and deeds in lieu of foreclosure. If your situation might qualify, that is a conversation worth having early.
One strategy note: pricing near a tier boundary matters more than it used to. A skilled listing agent will factor the tax structure into pricing strategy, not just comps.
What This Means for Buyers
Directly? Very little. The transfer tax falls on the transaction, not on your ownership going forward, and in most cases the seller pays it. Indirectly, some sellers near the $1.8 million threshold may adjust pricing, and negotiations on higher end homes may now include the tax as a talking point. A buyer's agent who understands the new structure can use that knowledge to your advantage.
What This Means for Homeowners Staying Put
If you own within city limits, expect the $96 parcel tax on your bill and check whether you qualify for an exemption. The transfer tax only touches you if and when you sell above the threshold. If you own in Aptos or elsewhere in the county, nothing changes for you at all.
The Bottom Line
Measure C is a meaningful change, but it is a manageable one, and for the majority of homeowners in Santa Cruz County it does not apply at all. The median priced home in the city sells well below the $1.8 million threshold, and everything outside city limits is unaffected.
That said, the details matter, especially at the luxury level where tier structures, exemptions, and pricing strategy can shift your outcome by thousands of dollars. This is exactly the kind of moment where working with experienced Santa Cruz realtors pays for itself.
Whether you are selling a Westside home over the threshold, buying your first place in Midtown, or comparing Aptos realtors for a Seascape listing, the Strock Team knows this market street by street and reads the fine print so you do not have to.
This post is for general informational purposes and is not tax or legal advice. Consult a tax professional or real estate attorney about your specific situation.