REAL ESTATE NEWS (Los Angeles, CA) — L.A. voters have approved Initiative Ordinance ULA, also known as the “mansion tax,” which imposes a new real property transfer tax on all real property sales priced or valued from $5 million up to $10 million and a higher rate for properties priced or valued at $10 million or greater. The tax is effective April 1, 2023, and is in addition to the existing City and County of Los Angeles documentary transfer taxes, making the latter rate among the highest in the country. The revenue generated from the tax is intended to fund various City efforts to increase the supply of affordable housing and reduce housing costs for homeless and low-income individuals. The ULA Tax applies to all types of real property, from single family homes to office skyscrapers, located in the City of Los Angeles and not otherwise exempted. Certain transfers, such as those to non-profit entities, Community Land Trusts, and Limited-Equity Housing Cooperatives, are exempt. The tax applies to the total sales price or value of the property transferred, without reduction on account of any assumed debt. The tax may discourage some transactions generating modest profit and may have a chilling effect on buyers and sellers in certain situations. The effect of the ULA Tax on the Los Angeles real estate market is uncertain, and it remains to be seen which party will ultimately bear the higher costs. Some developments may become newly profitable, and proceeds from the ULA Tax may be used by the Los Angeles Housing Department to provide financing for qualifying affordable housing projects. A lawsuit has been filed challenging the validity of the ULA Tax, and the litigation is currently pending.
The Loft Blog analysis of the new tax indicates that inflation and economic stagnation will be worsened from the new additional tax because Los Angeles real estate taxes were already too high. More Californians are leaving the state, increasingly moving to lower tax states.
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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Broker CalDRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.