Shawn Lavi, CPA, is the principal and the author of this page. Elias Lavi is co-owner and founder.
Palo Alto has a city transfer tax, a business tax measured in square feet, and a registry for larger rental buildings. We work with Palo Alto owners remotely, over Zoom, phone, and secure upload. Our only office is at 7707 Sunset Blvd in Los Angeles, and we do not have an office in Palo Alto.
A CPA owner, Shawn Lavi, CPA or Elias Lavi, CPA, reviews your file.
The Palo Alto transfer tax
Palo Alto charges a city transfer tax of $1.65 per $500, which is $3.30 per $1,000. Santa Clara County adds $1.10 per $1,000. On a $3 million sale, that is $13,200 combined.
The city rate is flat. Two neighbors are not. San Jose adds a Measure E tax above $2.3 million, and Mountain View has a higher Measure G rate above $6 million. If you are choosing between replacement properties in a 1031 exchange, the city line can change the closing math.
Measure K: a business tax by the square foot
Palo Alto voters approved Measure K in November 2022. It taxes businesses on the space they occupy, at $0.075 per square foot per month. The first 10,000 square feet are exempt, and residential space is exempt. Each business has a $500,000 annual cap. The rate and the cap rise 2.5% a year starting in fiscal 2026-2027.
Returns are quarterly, due January 1, April 1, July 1, and October 1. Separately, businesses with a fixed place of business in the city pay an annual business registry fee of $54, due March 31. Home-based businesses are exempt from the registry.
If you own commercial space, the tax usually falls on your tenants. Leases differ, so we read yours when we plan.
The Rental Registry Program
Palo Alto requires owners of rental properties with three or more units to register them every year. Registration for Program Year 3 runs October 1, 2026 through January 19, 2027. Registry costs are rental expenses on your return.
Appeals in Santa Clara County
The regular window to appeal a Santa Clara County assessment runs July 2 through September 15. That is earlier than Southern California counties.
Palo Alto FAQs
Does Measure K apply to my Palo Alto rental house?
No. Residential space is exempt from the Measure K business tax.
What is the transfer tax on a $3 million Palo Alto sale?
$9,900 to the city and $3,300 to the county, $13,200 in total.
Do I have to register my Palo Alto duplex?
The Rental Registry Program covers properties with three or more units, so a duplex is generally outside it.
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General information only, not advice for your situation. Rules and rates change, so we confirm them before you act.