Sep 18, 2026 · 4 min · 5 segments
This week, we're covering San Francisco's vacant property tax, which a California appeals court struck down.
There are live webinar and in-person seminar options available, and you can get details and register at Spidell.com. A California appeals court has dealt another blow to San Francisco's Proposition M, which levied a tax on owners of empty San Francisco apartments vacant for six months or more.
The first district court of appeal upheld a prior decision that prevents Proposition M from taking effect, stating that it conflicts with the Ellis Act, which is a 1985 state law that protects an owner's right not to offer residential property for rent.
San Francisco's Measure M was passed by voters in 2022, took effect in 2024, and was effective through 2053.
Otherwise known as the Empty Homes Tax, the measure levied an annual tax on owners of residential units that remain vacant for more than 182 days out of the year.
The tax rate was between $2,500 and $5,000 per unit depending on square footage with adjustments for inflation, reaching as high as $20,000 in the third year the tax applied.
The measure cited tens of thousands of vacant residential units in San Francisco as of 2019 and limited the vacancy tax to buildings with more than two residential units.
The proceeds of the tax were to be used for affordable housing and low-income rent subsidies.
However, the Ellis Act prohibits any requirement for an owner to offer or to continue to offer accommodations in the property for rent or lease, which embodies a statewide policy that public entities cannot compel residential owners to remain landlords.
It grants property owners both the right to enter the rental market and the right to exit the rental market, plus the right to remain out of the market entirely.
City Attorney David Chu, whose office defended Proposition M in court, has not yet indicated whether he plans to appeal to the California Supreme Court.
A growing trend in California involves cities enacting or considering special taxes on real property left vacant for extended periods of time.
The stated purpose of these special taxes is typically to address housing shortages by encouraging owners to rent, sell, or occupy the properties.
The taxes have been typically structured as special parcel taxes requiring voter approval under Proposition 218. and often include exemptions for primary residences, long-term rentals, hardships, construction, nonprofits, among others.
Oakland's Measure W imposes an annual vacant property tax of $3,000 to $6,000 per parcel or unit on properties in use for fewer than 50 days per year with certain exemptions.
Berkeley's Measure M taxes residential units vacant more than 182 days per year.
The tax is $3,000 to $6,000 in the first year, doubling in subsequent years with inflation adjustments and certain exemptions.
The outcome of San Francisco's Measure M may have an effect on other vacancy tax measures in California now that owners facing vacancy-based charges have a significant new preemption precedent.
There are live webinar and in-person seminar options available, and you can get details and register at Spidell.com. A California appeals court has dealt another blow to San Francisco's Proposition M, which levied a tax on owners of empty San Francisco apartments vacant for six months or more.
The first district court of appeal upheld a prior decision that prevents Proposition M from taking effect, stating that it conflicts with the Ellis Act, which is a 1985 state law that protects an owner's right not to offer residential property for rent.
San Francisco's Measure M was passed by voters in 2022, took effect in 2024, and was effective through 2053.
Otherwise known as the Empty Homes Tax, the measure levied an annual tax on owners of residential units that remain vacant for more than 182 days out of the year.
The tax rate was between $2,500 and $5,000 per unit depending on square footage with adjustments for inflation, reaching as high as $20,000 in the third year the tax applied.
The measure cited tens of thousands of vacant residential units in San Francisco as of 2019 and limited the vacancy tax to buildings with more than two residential units.
The proceeds of the tax were to be used for affordable housing and low-income rent subsidies.
However, the Ellis Act prohibits any requirement for an owner to offer or to continue to offer accommodations in the property for rent or lease, which embodies a statewide policy that public entities cannot compel residential owners to remain landlords.
It grants property owners both the right to enter the rental market and the right to exit the rental market, plus the right to remain out of the market entirely.
City Attorney David Chu, whose office defended Proposition M in court, has not yet indicated whether he plans to appeal to the California Supreme Court.
A growing trend in California involves cities enacting or considering special taxes on real property left vacant for extended periods of time.
The stated purpose of these special taxes is typically to address housing shortages by encouraging owners to rent, sell, or occupy the properties.
The taxes have been typically structured as special parcel taxes requiring voter approval under Proposition 218. and often include exemptions for primary residences, long-term rentals, hardships, construction, nonprofits, among others.
Oakland's Measure W imposes an annual vacant property tax of $3,000 to $6,000 per parcel or unit on properties in use for fewer than 50 days per year with certain exemptions.
Berkeley's Measure M taxes residential units vacant more than 182 days per year.
The tax is $3,000 to $6,000 in the first year, doubling in subsequent years with inflation adjustments and certain exemptions.
The outcome of San Francisco's Measure M may have an effect on other vacancy tax measures in California now that owners facing vacancy-based charges have a significant new preemption precedent.
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