L.A.'s New 'Mansion Tax' - What You Need to Know
When Los Angeles voters headed to the polls in November 2022, several hot-button issues were on the ballot.
Among these was Measure ULA, widely known as the ‘Mansion Tax.’ Voters ultimately approved the measure, which will officially take effect in the City of Los Angeles on April 1, 2023. Whether you’re a real estate investor, a California home buyer, or someone interested in moving to the Golden State, it is important to understand exactly what Measure ULA means for real estate transactions moving forward.
Here, we answer all of your most important questions.
What exactly does Measure ULA do?
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For those unfamiliar with Measure ULA, it alters the 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.”
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.
What cities does Measure ULA impact?
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Only real estate transactions in the City of Los Angeles are subject to the “Homelessness and Housing Solutions Tax” at this time.
However, L.A. has joined a growing number of cities, including San Francisco and New York City, in imposing a ‘Mansion Tax.’ It is likely other Southern California municipalities will pass similar measures in the future.
What is Santa Monica’s Measure GS?
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To the previous point, the City of Santa Monica recently passed Measure GS, which authorizes the municipality to enact a third tier to its existing real estate transfer tax structure.
Starting March 1, 2023, a transfer tax rate of 5.71% will apply when the gross value of a property is $8 million or greater. In this case, typical transfer tax exemptions should apply.
If you have questions about any real estate transactions in Southern California, contact your real estate agent or your tax professional.
What do you think about Measure ULA?
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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