West LA & Westwood Real Estate Market
HOW THE MANSION TAX WILL AFFECT WESTWOOD HOMESELLERS
It’s been a few weeks since the elections. Let’s look closely at the measures affecting the real estate market. First, measure ULA, commonly known as the “mansion tax,” would impose a new tax on residential and commercial real property transfers in Los Angeles valued at more than 5 million dollars. This tax is listed as the “Homelessness and Housing Solutions Tax” and will attempt to bring in $600 million and $1.1 billion annually. This tax aims to fund affordable housing and tenant assistance programs.
Measure ULA - The Mansion Tax
Under this measure, sales of residential and commercial property valued at over $5 million but less than $10 million would be subject to an additional tax of 4%. Sales of residential or commercial property valued at $10 million or more would be subject to a 5.5% tax. The tax would be for the entire sale value, not just the amount more than the 5 and 10-million-dollar thresholds. The tax will also be applied regardless of whether the property was sold at a gain or a loss.
The tax would apply to property sales occurring on or after April 1, 2023. It will be in addition to the existing LA City and LA County documentary transfer taxes already in place at a combined rate of $5.60 per $1,000 of value.
An example of how this can affect homeowners is closing costs. In this example, a parcel of property sold in Los Angeles for five and a half million ($5.5 million, with the new tax in place, the homeowner will have to pay $3,300 in LA County Transfer Tax, $13,500 in LA City Transfer Tax, and a whopping $220,000 in Homelessness and Housing Solutions Tax. The tax a homeowner would have to pay would only increase as the purchase price increases. For example, the HHS Tax payment on a home sold at $10.5 million under the new 5.5% tax rule would be $577,500.
Measure GS for the City of Santa Monica Residents
Measure GS is a tax law specifically for the city of Santa Monica and will take effect on March 1, 2023. The tax will add a 5.6% tax on homes sold at $8 million or above.
Additional Mansion Tax Information
Considering selling your home in Los Angeles or Santa Monica, these measures and dates are crucial to remember. If you are worried about how this may affect your property, please do not hesitate to contact the leading Westside and Westwood real estate agency, the Shilian Group, at (310) 299-7655 for more information.