Measure ULA Was Approved — So Now What?

Tacos & Tequila


Back in October, we wrote an op-ed detailing the glaring issues with Measure ULA — the largest property tax hike in LA history — on the November 8 ballot. Despite our whistleblowing, voters approved the measure, imposing a substantial 4% tax on residential and commercial property sales/transfers of $5 million or more, and a 5.5% tax on those $10 million or more — all in addition to the existing 0.56% transfer tax. 

You might be asking yourself, what happens now? Don’t fret, we’ve broken it all down below, including key details and dates, which areas are affected (and which aren’t), and a look at the legal backlash that’s ensued.  

Who’s affected and when?

Measure ULA will take effect on April 1, 2023. This applies to both residential and commercial real estate, but we have some good news — incorporated cities such as Beverly Hills and Malibu are not included. At the point of sale, the one-time tax will be deducted through escrow, regardless of whether the seller is taking a loss on the property or not. 

Santa Monica residents are not affected by Measure ULA, however, a tax law specific to Santa Monica will take effect on March 1, 2023. Measure GS authorizes the city to enact a third tier to its real estate transfer tax structure. Put simply, this measure will impose a 5.6% tax on property sales/transfers valued at $8 million or more. 

If you’re considering selling your home in the city of Los Angeles or Santa Monica, these are crucial dates to consider. If either Measure ULA and Measure GS affect you, get in touch with us to see if we can help you avoid the additional tax.   

What’s the legal challenge?

There’s been an interesting development since Measure ULA’s passing, and one we could have easily predicted. At the end of December, a group of landlords known as the Apartment Association of Greater Los Angeles, as well as a group known as the Howard Jarvis Taxpayers Association, filed a lawsuit claiming that “the state constitution prohibits cities or counties from designating real estate transfer taxes for special purposes.” 

Let’s unpack that. The lawsuit from AAGLA and Howard Jarvis argues the law is “invalid” because it’s a special tax, rather than a general tax, that the city doesn’t have authority to implement. Not only that, the law, as we’ve maintained, is incredibly ill-conceived, particularly because it applies to gross sales figures rather than net profits. Overall, it will prove to be counterproductive, discouraging development and driving potential taxpayers out of LA altogether. 

So…what now?

Only time will tell how this new tax will alter the way real estate transactions are negotiated between parties. Until then, we’re here to lend our insights and expertise so you can navigate the ever-changing market with ease. Email us at [email protected] and let’s chat. 

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