LA Mansion Tax: Measure ULA
If you live in LA, and you’re involved in the real estate world, you’ve likely heard about the so-called. “LA Mansion Tax.” There are many questions regarding the guidelines of the LA City Mansion Tax – officially named “Measure ULA”- including:
- What is the LA Mansion Tax?
- When did the Mansion Tax go into effect in LA?
- How Much is the Mansion tax in Los Angeles?
- Where does Measure ULA apply?
- Who pays the LA Mansion Tax?
- How do I avoid The LA Mansion Tax
What is the LA Mansion Tax?
The LA Mansion Tax is a special transfer tax above and beyond the city’s base transfer tax, a regular closing expense paid at the final stages of a real estate transaction. This tax is known as the Homelessness and Housing Solutions Tax or United to House LA (ULA) measure. The LA mansion tax was officially instated in California on April 1,2023. According to City of Los Angeles measure ULA established the ULA tax fund to fund affordable housing projects and provide resources to tenants at risk of homelessness The LA mansion tax was expected to generate the city an estimated $900 million to $1.1 billion annually with most of the money going directly toward LA’s housing initiatives. These are divided into two main categories: 70% going towards housing production, and the remaining 30% toward homelessness prevention.
It is important to break down the requirements of the LA Mansion tax for both buyers and sellers in Los Angeles to understand when and how it applies.
When Did Measure ULA go into effect?
Measure ULA went into effect on April 1, 2023. Any home sold after April 1,2023 is subject to pay the LA mansion tax.
Who pays the LA Mansion Tax?
Under the current ULA measure, sellers are responsible for reporting and paying the “mansion tax” on the sale of their property.
How much is the Mansion Tax in Los Angeles?
The ULA tax is aimed at real estate at a specific price point- sold over $5 million. The tax imposes a 4% sales tax on properties exceeding $5 million, and 5.5% sales tax on properties exceeding $10 million.
The Measure ULA tax is taken off after the base transfer tax on the close of a home for sale. Therefore, it’s important to understand how the base transfer tax works. For a home purchase of over $5 million, the rate-based transfer tax would be calculated first, followed by the ULA measure tax, calculated based on percentage.
The City of Los Angeles charges a base tax rate of $2.25 per every $500 of a property’s value on all properties. Based on that rate, a home worth $6.5 million would carry a $29,250 base transfer tax. The United to House LA tax would then be charged in addition to the base tax but is calculated based on the home’s final sale price.
According to the current Measure ULA tax, properties that sell for anywhere between $5 million and $10 million would be subject to an additional transfer tax of 4% and properties that sell upwards of $10 million would carry a 5.5% ULA tax.
Value of Property Conveyed Base Rate ULA Rate Applicable Tax Rate
>$100 < $5,000,000 $2.25 / $500 0% 0.45%
$5,00,000 ; < $10,000,000 $2.25 / $500 4% 4.45%
$10,000,000 $2.25 / $500 5.5% 5.95%
Where does Measure ULA apply?
The Homelessness and Housing Solutions Tax exempts certain qualified affordable housing, nonprofit, and government organizations. The tax applies only to properties located within the City of Los Angeles and does not include the other 87 incorporated cities in Los Angeles, such as Burbank, Long Beach, Pasadena, and Santa Monica.
For the LA city guidelines regarding Measure ULA, visit their website by clicking here.
About Sheri Bienstock and The Bienstock Group:
Deep roots in LA are the foundation of The Bienstock Group’s local expertise, and Sheri Bienstock’s “people passion” is the foundation for how it runs. Born and raised in Hancock Park, Sheri was ranked #3 of Keller Williams Realty’s 133,000 agents before starting The Bienstock Group. Sheri has been ranked #1 Listing Agent in 90036 and Hancock Park! Read More about Sheri here!
Have questions regarding The LA Mansion Tax? Contact the Bienstock Group today!
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