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As Los Angeles continues on its path of recovery from wildfires that ravaged the city in January, Mayor Karen Bass is considering pressing pause on one of the city’s controversial real estate transfer taxes.
Bass is taking a hard look at the city’s ULA or “mansion” tax, which was enacted two years ago and levies a 4 percent tax on residential and commercial property sales above $5 million and a 5.5 percent tax on sales over $10 million, responsible for payment by the seller. She told a Breitbart reporter during a press conference on March 11 that her office is examining the possibility of at least suspending the tax.
“Maybe temporarily — we’re looking into that,” Bass told the reporter. “There’s two schools of thought. One is, that can’t happen. It has to go back to voters. And the other is that it might be able to happen with action from the council and the mayor’s office. We’re having that investigated through our attorneys right now.”
Since last week, however, there have been no further updates from Bass’ office on the topic.
The Mayor’s office did not immediately respond to Inman’s request for comment, but told The Real Deal it would “look at every possible option to support fire survivors and accelerate recovery.”
According to the LA City Charter, an ordinance adopted by voters could be overturned by voters in a subsequent election or through an amendment to the City Charter to supersede the ordinance.
The transfer tax sought to raise up to $1.1 billion in revenue to go toward combating homelessness and building affordable housing. So far, the tax has raised more than $375 million, about 46 percent of which has come from single-family home sales, 31 percent from commercial sales, 13 percent from multifamily sales, 5 percent from mixed-use and 5 percent from vacant property sales, according to the LA Office of Finance.
Mayor Bass did not take a stance on the ULA Tax while campaigning in 2022 for mayor, but subsequently praised a court ruling that dismissed a lawsuit against it in 2023.
Many LA area agents have criticized the tax, saying it has put a damper on the market and is also disincentivizing developers from wanting to be in LA. Shortly after the wildfires broke out earlier this year, several top agents and brokers penned an open letter to Bass and other California government officials asking them to make strategic adjustments to real estate-related laws to help with the city’s recovery. One of their requests was to allow property owners who lost their homes a temporary exemption from the ULA Tax.
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