Since its implementation in April 2023, Los Angeles’ ULA law (Measure United to House LA) has introduced a real estate transfer tax on high-end residential and commercial property transactions, commonly referred to as the “mansion tax.” Recent data indicates a significant increase in revenue generated by this controversial tax.
Passed by voters in 2022, the ULA law is aimed at funding affordable housing, preventing homelessness, and providing tenant assistance programs. The tax imposes a rate of 4% on property transactions exceeding $5.15 million and 5.5% on transactions over $10.3 million.
However, since the law came into effect, its fundraising has fallen short of expectations, generating approximately $400 million by the end of September—well below the projected annual revenue of $600 million to $1.1 billion. According to the Los Angeles Housing Department (LAHD), the law’s revenue for the previous fiscal year was about $60 million lower than expected, marking a 55% shortfall.
Nonetheless, recent figures from the LAHD offer a glimmer of hope for supporters of the ULA law. In the first three months of the new fiscal year, the measure generated around $91.2 million in revenue, a 37% increase compared to $66.5 million during the same period last year. The fiscal year for Los Angeles runs from July 1 to June 30 of the following year.
Among all property types, single-family homes have emerged as the largest contributor to this transfer tax. In September alone, revenues from residential transactions reached $11.6 million, accounting for 59% of total revenues. Since the law’s implementation, single-family home sales have contributed approximately $156.6 million in tax revenue, representing 39% of revenues from all property types. In terms of geographical distribution, the most active zip codes in terms of transaction volume and dollar amount have been 90049 (which includes neighborhoods like Bel-Air and Brentwood) and 90272 (Pacific Palisades).
Joe Donlin, Director of the Los Angeles Housing Alliance and a supporter of the ULA law, emphasized, “The ULA law has proven to be one of the largest sources of revenue for affordable housing in Los Angeles history.” He noted that the funds raised in the first year significantly exceeded those from a similar measure, Measure HHH, which bonds approximately $120 million annually. Regarding the lower-than-expected revenues, Donlin pointed out that many sellers completed transactions before the law took effect, but he is optimistic about the upward trend in tax revenues generated by the ULA.
In contrast to the rising contributions from single-family home sales, the commercial property sector has not seen similar growth, generating only $11.24 million thus far. Commercial real estate analysts have attributed this downturn to declining property values, lower demand, and high interest rates, which have significantly dampened investment activity in Los Angeles.
Meanwhile, some housing policy experts believe that the ULA law could be hindering housing development in the city. State law mandates that Los Angeles plans for nearly 500,000 new housing units by 2029.
