Proposition ULA Special Report

Measure ULA imposes new tax on real estate transactions. The city of Los Angeles’ new Homelessness and Housing Solutions Tax establishes a 4 percent to 5.5 percent fee on all real property sales priced over $5 million, starting April 1, 2023. Dubbed a mansion tax, this voter-approved measure will significantly impact not only the single-family housing market, but also commercial and multifamily properties. Property owners will need to adjust near-term hold strategies, and investor demand for citywide listings could decrease or shift to other options in the metro area. Recent sales activity solidifies the significance of the measure’s reach. Spanning the past 12 months ending June, nearly 760 apartment, retail, office and industrial listings each sold for more than $5 million, representing 44 percent of the metro’s trade volume. Furthermore, based on current property assessments, roughly 18,100 citywide buildings could be potentially impacted. The threshold for taxation will be adjusted annually based on a chained Consumer Price Index, suggesting properties in the $5 million to $10 million tranche won’t eventually be subject to the 5.5 percent tax rate because of inflation alone.