LA's Measure ULA Headed For Court
During the November 2022 midterm elections, Measure ULA was approved by Los Angeles County voters.
For those unfamiliar with this policy change, it alters the property transfer tax, currently set at a rate of 0.56%, encompassing both the city and county taxes.
Once the recently-approved measure takes effect, however, an additional tax will be imposed on all property sales exceeding $5 million. This is known as the “Homelessness and Housing Solutions Tax.”
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JD Supra explains that the new tax rate will be 4% of the entire property value when the consideration is at $5 million but less than $10 million; the rate is 5.5% when a transaction amounts to $10 million or greater.
The funds generated from this new tax will be used for housing subsidies and tenant protections. Bloomberg notes approximately $900 million in annual revenue is expected.
However, even though Southern California voters said “YES” to Measure ULA at the polls, not everyone is happy about the change. In fact, the tax change is headed for a court battle.
Globest shared details about a lawsuit filed by two organizations, a group of landlords collectively calling themselves the Apartment Association of Greater Los Angeles and a group known as the Howard Jarvis Taxpayers Association. These parties claim that California’s state constitution prohibits cities or counties from designating real estate transfer taxes for special purposes, such as low-income housing.
The lawsuit states, “If the Measure ULA tax increase is imposed as scheduled on April 1, 2023, great and irreparable harm will result to all Los Angeles property owners in being required to pay unconstitutionally imposed taxes.”
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Measure ULA proponents have responded, with Laura Raymond, a co-chair for the policy’s campaign, issuing a statement that said, in part, “The California Supreme Court has made it clear that our power as citizens to place the measure on the ballot is broad, and at least four recent decisions of the Court of Appeals have made it clear that City Charters cannot limit the initiative power to propose special taxes.”
While Measure ULA is commonly referred to as the “Millionaire’s Tax,” it is true that not just mansion dwellers will be affected – owners of multi-family units like apartment complexes are also likely to be impacted by this policy shift.
At this time, the next court date for the lawsuit against Measure ULA has not been publicly announced.
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Spencer Wilson, EA is a tax preparer based in Long Beach, CA. Spencer Wilson Financial Management Services has been serving the Greater Los Angeles Area and Orange County since 2004. <br /> We began in the heart of Naples in Long Beach and we continue to work hard offering tax preparation and planning, business accounting and bookkeeping and payroll services . <br /> We have helped many different people and businesses succeed financially and take control over their finances.
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