Measure ULA, (also known as the “Mansion Tax”), a provision that imposes a new tax on the sale or transfer of real estate property in Los Angeles, is getting pushback from real estate and anti-tax groups.
L.A.’s “Mansion Tax” Is Challenged in Court
A coalition of real estate and anti-tax groups has challenged the recently passed Measure ULA in court.
The measure slated to go into effect on April 1, 2023, would impose a new tax on sales or transfers of property in Los Angeles with the aim of alleviating the city’s housing crisis.
Although many know Measure ULA as the “Mansion Tax,” its effects would impact all types of properties, including offices, multifamily and industrial assets.
- To learn more about Measure ULA, check our previous post, “L.A.’s “Mansion Tax” and Its Impact on Commercial Real Estate”
Under the new measure, Los Angeles’ transfer tax would increase from the current 0.45% to 4% for properties valued between $5 and $10 million, and 5.5% for properties valued at $10 million or more.
So, for example, the current transfer tax for a property valued at $10.1 million is $45,450, but with Measure ULA in place, the transfer tax on the same property would be $555,500.
The Legal Challenge
58% of L.A. voters approved measure ULA in the November election. However, the new tax also has its detractors.
A lawsuit filed on December 21 by the Howard Jarvis Taxpayer Association and the Apartment Association of Greater Los Angeles argues that ULA measure is unconstitutional and claims that “Great and irreparable harm will result to plaintiffs, and to all Los Angeles property owners in being required to pay unconstitutionally imposed taxes.”
Since the success of the legal challenge to Measure ULA is far from guaranteed, property owners planning the sale of Los Angeles assets in the short term should seek the assistance of a commercial real estate professional to guide their decision-making.
Disclaimer: The information contained herein does not constitute legal or financial advice.
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