The City of Los Angeles will begin charging a ‘Mansion Tax’ on commercial and residential real estate transactions over $5 million effective April 1, 2023. The existing documentary transfer taxes in Los Angeles will not be repealed or altered by the mansion tax. Instead, there will be an extra documentation transfer tax determined by the property’s gross sales price.
Homeowners and property owners considering selling real estate in Los Angeles and want to avoid paying the mansion tax may have to hurry up as the deadline for implementation of the mansion tax is fast approaching. A sale transaction made effective from April onwards will attract a higher tax outgo.
The documentary-transfer tax for Los Angeles stands at $4.50 (Per $1,000), or the Real Property Transfer Tax rate is 0.45%. This calculation will not change after April 1, 2023, but there will also be a ‘Measure ULA Rate’ depending on the transaction amount. Measure ULA applies to transactions that close on or after April 1, 2023.
The additional tax will depend on the amount of the real estate transaction. When the qualifying properties are sold for more than $5 million but are under $10 million, it will be subject to the new 4% tax rate. But, if the real estate transactions involving commercial and residential properties are worth $10 million or more, they will incur a 5.5% tax rate.
Documentary Transfer Tax is imposed on all documents that convey real property within the cities of Los Angeles County and is computed when the consideration or value of the interest or property conveyed exceeds one hundred dollars ($100), at the rate of fifty-five cents ($0.55) for each five hundred dollars ($500), or fractional part thereof. The additional tax rates are for specific cities including Culver City, Los Angeles, Pomona, Redondo Beach and Santa Monica and are calculated at the full $1.10 per $1.
Click here to learn more information on this tax, including how to calculate it.
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Wow! Because prices in California aren’t high enough. This “soak the rich” attitude will continue to chase people out of California.
I have to agree with you. I was born and raised in California and always loved it, but I don’t love what I see happening now. It’s such a bummer.
Agreed with the other commenters. This measure will further pervert the normal functioning of the property market — as Prop. 13 currently does and has for over half a century — giving existing owners the incentive not to sell.
Another bad public policy choice by California. Too bad our representatives and referendum voters have little or no grasp of economics.
Also, refer to France’s experience with imposing a wealth tax. It sends those affected out of the jurisdiction.