Market Intel - The ‘Mansion Tax’ and Los Angeles CRE Market

The city of Los Angeles’ real estate market has been upended in recent months due to the passage of major new tax legislation, Measure ULA or commonly referred to as the ‘Mansion Tax’.?Measure ULA, approved by Los Angeles city ballot on November 8, 2022, is intended to raise funds for affordable housing and projects to prevent homelessness. The tax has attracted nationwide attention especially as it impacts one of the nation’s most expensive luxury housing markets but the tax impacts all types of commercial real estate sales.?The impact on CRE is important to watch especially as it arrived at an already challenging time for the market with interest rates at their highest levels since just before the Great Financial Crisis.

What is the Measure ULA Tax and what does it impact?

The?Measure ULA tax?impacts all types of properties that are sold after April 1, 2023 and applies only to certain sales price thresholds. The Measure ULA rate is 4%?for properties conveyed over five million dollars but less than ten million but rises to 5.5% for properties conveyed over ten million dollars.?While the tax has largely made the news for?impacting luxury residential?(hence its nickname as the ‘Mansion Tax’), it applies to all commercial and residential property sales as well as land sales taking place over these price thresholds and only within the city of Los Angeles. Future thresholds will be adjusted annually by the city of Los Angeles depending on the movement of the Consumer Price Index (CPI).

What's its current impact and anticipated future effect? Check out the full blog below for more info!