Real estate costs are local, and Measure C is a strong example of why the exact location of a property matters.
Beginning July 1, 2026, the City of Santa Cruz added a graduated real estate transfer tax to qualifying property transfers above $1.8 million. The new tax is part of the Workforce Housing Affordability Act of 2025 and is intended to fund affordable housing and homelessness-prevention efforts within the city.
For anyone buying or selling Santa Cruz real estate, the headline is important. The details are even more important.
First, Measure C Is a City of Santa Cruz Tax
Measure C applies to real property located within the incorporated City of Santa Cruz. It does not apply throughout Santa Cruz County.
That means a home in Aptos is not subject to the Measure C transfer tax. The same is true for property in the City of Capitola and other communities outside Santa Cruz city limits. Tax obligations can change from one jurisdiction to the next, even when two homes are only a few miles apart.
All taxable transfers in Santa Cruz County may still be subject to the county’s existing documentary transfer tax. Measure C is an additional City of Santa Cruz tax, not a replacement for that countywide tax.
This distinction matters when comparing Santa Cruz real estate with Aptos real estate or Capitola real estate. A local Santa Cruz Realtor or Aptos Realtor should account for the property’s jurisdiction when preparing an estimated net sheet or reviewing likely closing costs.
How the Measure C Transfer Tax Works
Measure C uses a progressive, marginal structure. Only the portion of a property’s value that falls within each tier is taxed at that tier’s rate.
Portion of Property Value | Measure C Rate |
|---|---|
Up to $1,800,000 | No new tax |
Over $1,800,000 to $2,500,000 | 0.5% |
Over $2,500,000 to $3,500,000 | 1.0% |
Over $3,500,000 to $4,500,000 | 1.5% |
Over $4,500,000 | 2.0% |
The maximum Measure C transfer tax is $200,000 per transaction. Beginning July 1, 2027, the thresholds are scheduled to adjust annually based on inflation, and the cap may also adjust within the limits established by the measure.
The most important point is that the highest rate does not apply to the full sale price.
For example, the City’s official calculation for a $2.6 million sale is:
- No new tax on the first $1.8 million
- $3,500 on the next $700,000 at 0.5%
- $1,000 on the remaining $100,000 at 1.0%
- Total Measure C tax: $4,500
That amount is in addition to the existing real property transfer tax.
Who Pays the Tax?
Under the Measure C text, the parties transferring and receiving the property are jointly and severally liable for the tax. In practice, who pays a transfer tax can be addressed in the purchase agreement and through escrow, so it should never be treated as an automatic assumption.
The City states that the Measure C transfer tax is due through the title company when the deed transfers. Certain transactions may qualify for an exception, including some transfers between spouses, qualifying affordable-housing transfers, deeds in lieu of foreclosure, and certain entity or government transfers.
Before relying on an exception or estimating a final amount, confirm the details with the title or escrow company and an appropriate tax or legal professional.
What Measure C Means for Santa Cruz Home Sellers
For qualifying City of Santa Cruz properties, this tax should be considered early in the selling process, not at the closing table.
A thoughtful pricing and net-proceeds strategy should account for:
- The property’s exact jurisdiction
- The progressive tax calculation
- Existing transfer taxes and other closing costs
- Any possible exemptions
- How the purchase agreement allocates the cost
For higher-value homes, the difference between a list price and a seller’s actual proceeds can be meaningful. Clear planning creates room for better decisions around timing, pricing, preparation, and negotiation.
What Buyers Should Know
Buyers should also understand the measure before writing an offer on a City of Santa Cruz property above the threshold. Although local custom may influence how transfer taxes are handled, the purchase agreement controls the negotiated allocation between the parties.
If you are buying a home in Santa Cruz, compare the full cost of ownership and closing structure, not simply the purchase price. If your search also includes buying a home in Aptos or Capitola, remember that Measure C does not follow you into those jurisdictions.
Local Knowledge Matters More Than Ever
Santa Cruz County real estate is not one uniform market. Aptos, Santa Cruz, Capitola, Rio Del Mar, Seacliff, and nearby communities each come with different property types, neighborhood dynamics, and jurisdictional details.
The right advice begins with the right address.
If you are considering selling a home in Santa Cruz, exploring Aptos real estate, or comparing opportunities across the county, the Strock Team can help you understand the local market and build a strategy around your goals.
Curious what the market looks like for you? Call us at 831-688-9800 start the conversation.
Strock Team | eXp Luxury
Where Remarkable Real Estate Lives in California
Santa Cruz County · Monterey Bay · Silicon Valley
831-688-9800
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This article is for general informational purposes only and is not tax, legal, or financial advice. Tax rules, thresholds, and exemptions may change. Consult the City of Santa Cruz, your title or escrow professional, and qualified tax or legal counsel regarding a specific transaction.