A new law recently went into effect in Los Angeles that subjects all real estate sales of $5,000,000 or more to pay an additional transfer tax. Formally titled Measure United to House LA (ULA) and commonly known as the “ULA tax” or the “Los Angeles Mansion Tax,” it affects almost all residential and commercial land transactions over a certain dollar amount.
WHAT IS THE ULA?
The United to House LA (ULA) tax applies to real estate transactions that exceed a specific dollar amount. The amount depends on the value of the transaction. For example, a property valued at $5,000,000 or more will have a different rate than a property valued at $10,000,000.
WHY DID THIS HAPPEN?
The initiative is expected to generate significant funds for the city of Los Angeles, and the project aims to address the housing crisis and provide support for the homeless and vulnerable communities. The money will go directly to the House LA Trust Fund to support the Los Angeles Program to Prevent Homelessness and Fund Affordable Housing.
The program above assists low-income individuals and families by helping them find housing. It aims to preserve affordable housing in the area and provides eviction legal assistance for tenants.
EXEMPTIONS
The law exempts certain real estate transactions from the ULA tax. The exemptions apply to:
- Non-profits
- Housing coops
- Community land trusts
- LLCs or limited partnerships with non-profit managing members of partners
CHALLENGES
Real estate brokers have raised concerns over the new tax, alleging the initiative will impact real estate transactions and operations within Los Angeles. Several organizations have sued the city, alleging that the state constitution forbids initiatives such as this one.
The transfer tax lawsuits are ongoing. The city of Los Angeles is working with a private law firm and the City Attorney’s Office.
