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Unveiling San Francisco's Empty Homes Tax: What You Need to Know

The cityscape of San Francisco is set for a change, marked by a new initiative to address the challenges of vacant residential units. Let’s delve into the details of the recently approved Empty Homes Tax, scheduled to take effect on January 1, 2024.

What is The Empty Homes Tax?

On November 8, 2022, San Francisco voters gave a nod to The Empty Homes Tax, a significant step towards tackling the issue of vacant residential units. This tax imposes financial consequences on property owners who keep certain residential units unoccupied for more than 182 days in a calendar year. While the tax filing and payment will commence for most individuals in 2025, it’s essential to understand its impact and implications.

Who Does This Tax Impact?

The Empty Homes Tax will impact every individual who owns a residential unit in a structure with three or more residential units, with limited exceptions. The obligation to file a return arises unless the property owner is covered by the Homeowners' Exemption Period for the entire year. The Homeowners' Exemption Period applies when a residential unit serves as the principal place of residence for any owner who has validly claimed homeowners' property tax exemption or the disabled veterans' exemption.

Breaking Down the Tax Rates for 2024

In 2024, the tax on owners for keeping a residential unit vacant is determined based on the square footage of the unit. Here's a quick rundown of the tax rates:

Less than 1,000 sq. ft.: $2,500

1,000 to 2,000 sq. ft.: $3,500

Greater than 2,000 sq. ft.: $5,000

These rates are structured to encourage responsible occupancy of residential units and discourage prolonged vacancies.

Understanding Vacancy Criteria

A residential unit is considered vacant if it remains unoccupied, uninhabited, or unused for more than 182 days in a tax year, whether consecutively or non-consecutively. However, certain qualified vacancy exclusion periods exist. Importantly, units occupied or intended for occupancy primarily by travelers, vacationers, or other transient occupants are not subject to the Empty Homes Tax.

In essence, San Francisco's Empty Homes Tax aims to promote the responsible use of residential properties, ensuring that units are occupied and contributing to the vibrant fabric of the city. As we anticipate the implementation of this tax, please contact me if you have any questions. 

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Cece Doricko San Francisco Real Estate specializes in luxury properties and has developed an incredible network to help you find the home of your dreams. Our well honed team of experts, preferred vendors, and Compass support will help prepare your home for the market with great efficiency to achieve the greatest value.