New Higher Real Property Transfer Taxes Approved By Voters in November 2022 Election
City of Los Angeles - Effective April 1, 2023
The City of Los Angeles imposes a new Measure ULA transfer tax, which is set to take effect on April 1, 2023, and is to be levied at the time of sale of real property residential and commercial property at the rate of 4% for properties sold between $5 million and $10 million, and 5.5% for real property sales above $10 million or above. For example, if an owner of real property is selling the property for $10 million, the owner will now be responsible for an additional $555,000 of tax on the sale. The money raised by this measure is designated for the production and acquisition of affordable housing, as well as homelessness prevention measures in the form of rent relief, income support for rent-burdened seniors, and legal counsel for tenants facing eviction.
Lawsuit Filed:
The Howard Jarvis Taxpayers Association and the Apartment Association of Greater Los Angeles filed a joint lawsuit against the City of Los Angeles seeking to overturn the recently passed Measure ULA.
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City of Santa Monica - Effective March 1, 2023
Santa Monica has approved Measure GS, which authorizes the city to enact a third tier to its real estate transfer tax structure on the sale of residential and commercial property. Under current law, the transfer tax rate depends on the gross value of the realty transferred. The rate is 0.41% when the gross value is less than $5 million and 0.71% when the gross value is $5 million or more (which rates are inclusive of a county level tax). This 0.71% rate tier was recently added by a ballot measure approved in November 2020. Now, the residents of Santa Monica have approved an additional tier, which, beginning March 1, 2023, will impose tax at a rate of 5.71% when the gross value is $8 million or greater.
Lawsuit Filed:
An organization called the California Business Roundtable, which is composed of senior executive leadership from major employers throughout the state, is filing a suit against the City of Santa Monica to block Measure GS, which established a third tier of real estate transfer tax.
Contact us for the strategies and opportunities that will take effect with these new measures in 1st quarter of 2023.