MEASURES ULA & GS PASSED – How Will it Affect You & the Real Estate Market
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It will be more expensive to sell any real estate $5 million+ in Los Angeles. Beverly Hills, West Hollywood and Malibu are excluded.
Measure GS is specific to Santa Monica. All properties sold at $8 million and above will be taxed at 5.6%
In Los Angeles the deed must transfer by March 30, 2023 to avoid this extra cost of sale. New tax is effective April 1, 2023 and Hancock Park, Windsor Square, Fremont Place, Brookside and Larchmont will be impacted.
Santa Monica’s new tax will be effective March 1, 2023
LA County Tax assessor currently averages about $207MM/year which goes to the General Fund, not housing. Real estate transfer taxes are approximately 0.45% of the sales price.
ULA is a new progressive tax structure similar to recent taxes hikes passed in San Francisco, Santa Monica and Culver City that is expected to generate as much as $923MM* additional revenue annually for affordable housing and tenant assistant.
Effective April 1, 2023 the measure will impose an additional sale transfer tax in Los Angeles County:
• 4% tax on ANY real estate transfer/sale with a gross sales price of between $5 million to $10 million
• 5.5% tax on all sales over $10 million.
A citizen committee of 15 appointed by the Mayor and approved by city council will oversee and monitor. A third party needs assessment will be conducted every three years to aid in transparency and efficiency.
All real estate development will be affected.
An estimated 1.3% of Sellers who are largely corporations will be impacted which is likely to trickle down to the boarder economy in the form of higher rents for commercial tenants, renters and small businesses. UCLA projects approximately 4% of real estate transfers will be affected or 3% of single-family homes sales. The majority of revenue (72%) is expected from sales over $10MM. The potential impact could be widespread for the city.
Los Angeles is the #2 city in the nation for outbound movers followed by San Francisco (April 20202- Jan 2022). 37% of households own homes in the city of Los Angeles versus 65% nationwide. Rents are outpacing wages and the city vacancy rate is now 3.5% from 6% in 2001.
Presently there are 66,000 homeless in Los Angeles County per ULCA, 41,000 in the city of Los Angeles which is a 60% increase since 2015.