On November 8, 2022, Los Angeles voters approved Measure ULA. Known as the "Mansion Tax," transfer taxes will increase real estate sales valued at more than $5 million. The stated purpose of Measure ULA is to fight homelessness through the funds raised by the imposition of the tax to increase the supply of affordable housing, provide tenant assistance programs, and build organizations serving low-income and disadvantaged communities.
Los Angeles Voters Approve "Mansion Tax" Ballot Measure
Before the passage of Measure ULA, both the city of Los Angeles and the County of Los Angeles levied a documentary transfer tax on the sale and transfer of real estate within the city. Before the passage of Measure ULA, the transfer tax on real estate transactions within the city was 0.56% (including the county portion). The 0.56% tax applies to commercial and residential real estate transfers.
Effect of Measure ULA
With the passage of Measure ULA, an additional "Homelessness and Housing Solutions Tax" will be imposed on real estate sales of property over $5 million. This new tax will be in addition to the pre-existing 0.56% transfer tax rate. For properties where the value or consideration paid is over $5 million but less than $10 million, the Homelessness and Housing Solutions Tax will be 4% of the value. If the value or consideration paid is $10 million or more, the Homelessness and Housing Solutions Tax rate will be 5.5% of the value.
Measure ULA will become law on January 1, 2023, but it will not apply to transactions until April 1, 2023. Transfers to specific affordable housing entities and government agencies will be exempt from the new Homelessness and Housing Solutions Tax. The property value threshold subject to the tax will be adjusted annually based on the Chained Consumer Price index.
The trend of increasing transfer taxes on high-value real estate transactions started in the San Francisco Bay Area but is beginning to appear throughout the state, with San Jose, Culver City, and Santa Monica all increasing transfer taxes on high-value transactions.
Additional Information
If you need additional information regarding this change in Los Angeles real estate transfer taxes, please get in touch with one of the following HCVT state and local team members for assistance.
Douglas Andersen | 562.216.5512 | douglas.andersen@hcvt.com
Jess Penilla | 657.205.3665 | jess.penilla@hcvt.com
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