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California is known for its high property values. And in some parts of the state, like Los Angeles, high-value property owners now face additional financial considerations with a mansion tax. Officially known as the Measure ULA, or the United to House L.A. proposition, it primarily impacts high-end property sales by adding a levy on transactions exceeding $5 million. If you’re a homeowner, investor, or seller in the California real estate market then it’s important to understand how this tax works.
A financial advisor can provide personalized guidance, helping you optimize your real estate strategy while staying compliant with state regulations.
While California does not have a statewide mansion tax, Los Angeles has one for the city. A mansion tax is a real estate transfer tax imposed on high-value property sales. Unlike standard property taxes, which are paid annually, this tax is levied at the time of sale.
The tax primarily targets high-value residential and commercial property owners who sell properties above $5.15 million as of June 2024. It affects those selling single-family homes, condominiums, apartment complexes and some commercial properties.
While California has several local transfer taxes, the Measure ULA tax specifically applies to properties sold in Los Angeles. However, several high-income neighborhoods outside Los Angeles, such as Beverly Hills, Malibu and Calabasas, are exempt from the tax.
In addition to Los Angeles, the other jurisdictions in California that have enacted “mansion taxes” include Berkeley, Culver City, Emeryville, Oakland, Richmond, San Francisco, San Jose, San Mateo and Santa Monica.
The tax rate depends on the sale price of the property. For Los Angeles:
These rates are significantly higher than traditional real estate transfer taxes, making it essential for sellers to plan accordingly.
The mansion tax became effective in Los Angeles on April 1, 2023, after being approved by voters under Measure ULA. It raised $192 million in its first 10 months, and is the largest single source of revenue for affordable housing and homelessness prevention programs.
The tax is typically paid at closing by the seller. This means if a property sells for $6 million, the seller is responsible for paying 4% of the sale price ($240,000) in mansion tax fees.
