The Santa Barbara City Council has moved forward with discussions on a proposed Real Property Transfer Tax (RPTT) that could appear on the November 2026 ballot as city leaders address a projected $14.6 million budget deficit.
During the March 3, 2026 meeting, the council signaled support for continuing work on the measure, which would increase the tax on certain property sales within city limits. Officials said the proposal could generate new revenue to support affordable housing efforts and help fund essential city services.
Council members said the proposed tax is being considered as part of a broader effort to address the $14.6 million deficit in the next fiscal year.
They added that the city will likely need a combination of spending reductions and new funding strategies to maintain long-term financial stability.
Under the current tax structure, the city collects 55 cents per $1,000 of a property’s sales value.
The proposal would add $9.50 per $1,000 for property sales valued at $3 million or more. If adopted, the combined transfer tax rate would increase to $10.60 per $1,000 for those transactions.
Financial estimates presented during the meeting indicate that the proposed transfer tax could generate between $5 million and $6 million annually. Officials said the projection is based on historical data from property transactions within the city.
According to city staff, the proposed tax would affect only a small portion of property transactions. Historical records show that approximately 89% of property sales in Santa Barbara are valued below $3 million.
As a result, about 11% of transactions would be subject to the higher transfer tax rate.
Although the initial recommendation focused on a single $3 million threshold, several council members asked staff to study a tiered structure for the tax.
Under a possible three-tier system, properties valued below $3 million would remain under the current rate, while sales between $3 million and $5 million could face a moderate increase.
Higher rates could apply to properties selling for more than $5 million or $6 million.
Officials said a tiered system might increase potential revenue to around $10 million annually, though it would depend on the number of high-value property sales in a given year.
Mayor Randy Rouse voiced opposition, stating he does not support raising taxes at this time and citing concerns about city spending practices.
The council also debated whether certain property types should be exempt from the proposed tax.
Staff reported that removing multi-family units from the tax base would reduce annual revenue by nearly $1 million.
They warned that the higher tax could influence buyer behavior, potentially encouraging purchasers to consider nearby areas such as Goleta or Montecito, where the tax would not apply. Others suggested that higher transfer costs could discourage property turnover.
In previous years, revenue reached about $13 million during the post-pandemic housing boom but has since stabilized at roughly $5 million to $6 million annually.
A formal resolution to place the measure on the ballot is expected to be considered in June or July 2026.
If approved, voters will decide on the proposed property transfer tax during the November 2026 election as the city searches for ways to address its budget challenges.
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We need to remember that the excessive increase in the cost of housing has nothing to do with the inherent ability of those garnering this windfall. If you inherited the land or owned it for decades you have had amazing tax breaks that made this “profit” possible. If you are a wealthy person using money to invest in this scarcity for simple greed you have even less to complain about. Paying a small share of that windfall is appropriate contribution to the needs of the community that made it possible.
Thank you Randy for opposing this tax and highlighting the city’s spending. Let’s start with cost cutting before raising yet another tax!! SB City council has lost their mind!
Once again I’m glad I don’t live within the city of SB. The liberal majority on the Council is great at mismanaging other peoples money.
What’s wrong with increasing property tax on upper class homes? Are you one of those “tax everyone the same” folks who don’t want to pay their fair share?
Well there it is folks – we were right about the BI GUY living in Ventucky.
Doesn’t live there, has no dog in the fight, and whines about it daily. Typical conservative beta male vibes!
At some point the average home will be over $3M and most people will be subject to the higher tax.
Bought our first house for $67K in 1978 now worth $2.3M.
BTW, The post-Prop 13 tax model is more equitable because it treats real estate like other major assets. Just as you pay sales tax once on jewelry or art—allowing you to hold or inherit them without ongoing costs—many countries use a one-time ‘stamp fee’ of roughly 7% for property. I believe real estate should be taxed at the point of sale rather than through unpredictable annual increases.
Just more apologia for greed. Inheritance taxes need to be increased to prevent even more wealth concentration.
> now worth $2.3M
We’re all crying in sympathy for your terrible bad fortune of being taxed on these gains.
> Just as you pay sales tax once on jewelry or art
LOL
They don’t call it REAL property for nothing. Turn on your brain and see if you can think of any attribute (or, ahem, property) of real estate that is different from goods like jewelry and art.
Here’s a clue: no roads were built and maintained in order to make your jewelry and art functional.