Residents of Los Angeles have approved Measure ULA, a ballot measure known as the “Mansion Tax,” which increases transfer tax rates on real estate sales valued at $5 million or more. Prior to Measure ULA, real estate transactions in the City of Los Angeles are generally subject to a transfer tax at a 0.56% rate (which includes the county tax). The amount subject to tax is either the gross value of the property or consideration received, but reduced by lien encumbrances remaining on the property at the time of transfer.

Measure ULA takes effect on April 1, 2023. Under Measure ULA, there will be an additional “Homelessness and Housing Solutions Tax,” when the consideration or value of the interest or property conveyed (irrespective of any lien encumbrances) in the City of Los Angeles exceeds $5 million. This new tax will be in addition to the aforementioned 0.56% levy. The Homelessness and Housing Solutions Tax will be 4% of the entire value when the consideration or value is at least $5 million but less than $10 million; the rate is 5.5% when the consideration or value is $10 million or greater. Transfers to certain affordable housing entities, tax exempt organizations with assets of less than $1 billion, and government agencies will be exempt from the tax. The measure authorizes the Los Angeles City Director of Finance to issue rules and regulations to clarify and potentially limit which transactions would be subject to the tax. It is currently not known whether Los Angeles will take the position that transactions exempt from the current 0.56% levy, such as foreclosure transactions or transfers to wholly owned subsidiaries, will be subject to the Homelessness and Housing Solutions Tax.

Summary:

• 4% tax on properties sold or transferred for more than $5 million but less thank $10 million
• 5.5% tax on properties sold or transferred for more than $10 million
• establish the House LA Fund within the city treasury to collect additional tax revenue; and
• allocate revenue to projects that address housing availability at certain income thresholds and homelessness prevention.

How To Calculate Transfer Tax?

Will "Mansion Tax" - Measure ULA raise the cost of properties in the city? Let's Connect! Email: [email protected]