A tax on high-value property sales, dubbed the "mansion tax" in Los Angeles, faces outright elimination or revision with softened standards to alleviate what critics say is a slowdown in commercial deals and luxury residential sales.
Mayor Karen Bass and the Howard Jarvis Taxpayers Association have offered plans to adjust Measure ULA, which passed in November 2022 and took effect the following April.
Under Bass' plan, the Los Angeles City Council would grant a one-time exemption from the tax for Pacific Palisades homeowners affected by the January 2025 fires. Bass argues that the exemption would expedite sales of burned properties and spur rebuilding efforts, ultimately generating more revenue when the homes are resold.
The second initiative from the state's largest taxpayer association proposes a constitutional amendment that would establish a statewide cap on transfer taxes far below the current maximum rate in Los Angeles. The measure would also reinstate a two-thirds voter-approval requirement for citizen-driven tax measures. If the association's plan is adopted, the mansion tax would be phased out.
Together, the two proposals pose the biggest challenge to the long-debated Measure ULA to date. The tax itself levies a 4% tax premium on property sales between $5.3 million and $10.6 million. For sales in excess of that amount, a 5.5% tax is added. Supporters have called the tax a lifeline for affordable housing projects.
The current $376.7 million housing funding round — the largest in the city's history — is open to nonprofit builders, for-profit affordable developers, and community development corporations.
Legal analysts have said it's unlikely that tax revenue already collected will be refunded — unless ordered by a court — because funds raised under a validly enacted measure are typically retained. Still, uncertainty is shaping how developers plan projects that rely on public subsidies and multiyear, layered financing.
Update: A California court has rejected an appeal from the Howard Jarvis Taxpayers Association to dismantle Measure ULA.