Is the New Mansion Tax Hitting Los Angeles Homeowners Hard?
                     Is the New Mansion Tax Hitting Los Angeles 
 Homeowners Hard?
"I need to sell my house fast in Los Angeles, CA, but I'm curious about the new Mansion tax."  
In early 2023, Los Angeles experienced a surge in luxury real estate deals ahead of the arrival of 
 Measure ULA, commonly known as the 'mansion tax,' which came into effect on April 1. This  
tax, in addition to regular property and capital gains taxes, applies to homes sold after that date.  
If you're a Los Angeles homeowner with questions about this tax, don't worry – we're here to  
provide answers!
What Is the New Mansion Tax in Los Angeles?
Los Angeles voters approved Measure ULA, known as the Homelessness and Housing Solutions  
Tax, in November 2022. This Measure amended Los Angeles Municipal Code § 21.9.2, also  
called the Real Property Transfer Tax Ordinance. The primary goal of Measure ULA is to  
generate revenue for affordable housing and homelessness prevention. Initially estimated to raise  
over $1.1 billion, it's now projected to yield $672 million. The tax will continue until Los  
Angeles voters decide to repeal it.
How Does the LA Mansion Tax Work?
The mansion tax applies a 4 percent tax to property sales of $5 million or more and a 5.5 percent  
tax to properties sold for $10 million or more.
Who Pays the Los Angeles Mansion Tax?
Sellers are responsible for paying the mansion tax. For example, on a $10 million home, this  
means an additional $550,000 tax, regardless of whether you profit from the sale.
Is This Local Tax Deductible?
Federal tax deductions for state and local taxes (SALT) are currently capped at $10,000,  
regardless of your marital status. If you're facing a transfer tax starting at $200,000 for a $5 
 million home, it's unlikely to yield a useful federal tax deduction.
Are There Any Exemptions for the ULA Tax?
Yes, as per Los Angeles office of finance, measure ULA offers exemptions. The ULA Tax won't  
apply to real property transactions in the City of Los Angeles if the transferee falls under newly  
added sections 21.9.14 and 21.9.15 of the Los Angeles Municipal Code ("LAMC").
Will the ULA Tax Value Thresholds Be Adjusted Annually?
According to Measure ULA, the value thresholds for applying the ULA Tax and its  
corresponding rates will be annually adjusted based on the Bureau of Labor Statistics Chained 
 Consumer Price Index. However, changes in these thresholds are not expected until the 2024  
calendar year.
Will the Mansion Tax Keep Pace With Inflation?
As per Forbes, there is one silver lining to this situation: the $5 million and $10 million  
thresholds will be adjusted annually to account for inflation. This adjustment aims to prevent the
average homeowner in Los Angeles from falling into the tax bracket due to property appreciation 
 in the coming years. It's important to mention that this newly introduced mansion tax comes on  
top of the existing 0.56% combined documentary transfer taxes that apply within the City and  
County of Los Angeles (including a 0.11% County Documentary Transfer Tax and a 0.45% City  
Documentary Transfer Tax). As a result, it represents a substantial increase in the overall  
expenses associated with real estate transactions in Los Angeles.
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