Most people hear the phrase mansion tax and assume it only affects people selling $20 million beach houses in Malibu. That is not actually how it works. Measure ULA, which Los Angeles voters approved in 2022 and which went into effect in April 2023, has turned out to be a much broader tax than its nickname suggests. If you are selling a property in the City of Los Angeles and the price is anywhere near five million dollars, this tax is relevant to you and the number on your closing statement might surprise you.
What Measure ULA Actually Is and How It Works
The Basics of the Mansion Tax in Plain English
Measure ULA is a real estate transfer tax. That means it is paid when a property is sold, not every year like property taxes. The money raised goes into a fund called House LA, which is meant to pay for affordable housing programs and help renters who are at risk of losing their homes.
According to the Los Angeles Office of Finance, the current rates as of July 1, 2025 are a 4% tax on property sales between $5.3 million and $10.6 million, and a 5.5% tax on sales of $10.6 million or more. These thresholds are adjusted each year based on inflation. On top of ULA, there is also the city’s standard base transfer tax of $4.50 per $1,000 of sale price, which applies to all property sales in the city.
The tax is paid by the seller. Not the buyer. That is a detail worth understanding before you start doing the math on your net proceeds.
Why It Is Called a Mansion Tax But Is Not Just for Mansions
The mansion tax label stuck because the campaign that put Measure ULA on the ballot marketed it as a tax on luxury homes. And for single family residential sellers, the $5.3 million threshold does still put it in high end territory. But here is the thing. Measure ULA applies to every type of real property in the City of Los Angeles. Apartment buildings, commercial properties, mixed use buildings, and bare land for development all trigger the tax if they sell above the threshold.
A small apartment building in a hot neighborhood, an older retail strip, an ADU project site. Any of these can cross that number in today’s market. And when they do, the tax bill can be significant. A property selling for $6 million generates a $240,000 ULA tax bill before the base transfer tax. A $12 million sale generates $660,000. Those are not small numbers, and they come directly out of the seller’s pocket.
How Measure ULA Has Affected the LA Property Market
Sales of High Value Properties Dropped Sharply After the Tax Took Effect
The data on what happened after Measure ULA went into effect is pretty striking. Researchers at UCLA’s Lewis Center and the RAND Corporation found that high value property sales in the City of Los Angeles fell by about 50 percent compared to similar properties in the rest of LA County after the tax took effect. That is not a small shift. It means a lot of people decided it was better to hold their properties than sell and hand over a large chunk of the proceeds in taxes.
According to a RAND Corporation analysis published in April 2025, the tax was projected to raise between $600 million and $1.1 billion annually. Collections have averaged around $280 million to $350 million per year instead. That shortfall tells you something real about how sellers have responded. Many are choosing not to sell rather than take the tax hit.
The UCLA and RAND research also estimated that Measure ULA has resulted in roughly 1,910 fewer new apartment units being built per year in Los Angeles, including at least 160 fewer affordable units that would have been produced without public funding. That is a serious unintended consequence for a tax that was sold as a tool to help people find affordable homes.
The Cliff Problem That Makes Sellers Nervous
One of the strangest parts of how Measure ULA was designed is what researchers call the cliff effect. The tax does not phase in gradually as a sale price increases. It kicks in all at once the moment a sale crosses a threshold. A property selling for $5,299,999 owes no ULA tax at all. A property selling for one dollar more, $5,300,000, immediately owes $212,000 in ULA tax on top of the standard transfer tax.
That kind of sharp jump creates strange behavior in the market. Sellers who think their property might land near the threshold often price it just below rather than risk triggering the tax. Buyers near that line sometimes push back hard on price, knowing the seller has a strong incentive to stay under the number. Real estate transactions near the threshold have become genuinely complicated in a way that did not exist before April 2023.
What Mid Range Sellers in LA Actually Need to Know
Who Is Most Likely to Feel the Impact of Measure ULA
For most single family homeowners in Los Angeles, the $5.3 million threshold is still above where they are selling. If you are listing a house in Boyle Heights, Van Nuys, or even most of Echo Park, you are likely under the line. But the story is different if you fall into any of the following categories.
- You own a small multifamily building, like a fourplex or sixplex, and the property has appreciated significantly in recent years
- You own commercial property or a mixed use building in a neighborhood where prices have risen fast
- You own land that a developer would buy for an apartment project
- You own a high end single family home in a premium neighborhood like Silver Lake, Los Feliz, or a hillside property above Sunset
- You inherited property that was bought decades ago and has appreciated far beyond the original purchase price
- Your sale involves multiple parcels being sold together that cross the combined threshold
If any of these apply to you, it is worth doing the math before you list. A $5.5 million sale that you could have structured differently, or timed differently, might have saved you a significant amount in transfer taxes.
A Simple Breakdown of What the Tax Looks Like at Different Price Points
Here is a straightforward look at what a seller would owe in total transfer taxes at different sale prices within the City of Los Angeles as of mid 2025. These numbers include both the standard base transfer tax and the ULA tax where applicable.
| Sale Price | Standard Base Tax (0.45%) | ULA Tax | Total Transfer Tax Owed |
|---|---|---|---|
| $3,000,000 | $13,500 | None | $13,500 |
| $4,999,999 | $22,499 | None | $22,499 |
| $5,300,000 | $23,850 | $212,000 (4%) | $235,850 |
| $7,500,000 | $33,750 | $300,000 (4%) | $333,750 |
| $10,600,000 | $47,700 | $583,000 (5.5%) | $630,700 |
| $15,000,000 | $67,500 | $825,000 (5.5%) | $892,500 |
The jump between $4,999,999 and $5,300,000 makes the cliff effect very clear. One sale stays under $25,000 in total transfer taxes. The other tops $235,000. That is a difference of more than $210,000 on a sale price increase of just $300,001.
What Is Being Done About Measure ULA and What Sellers Should Watch
Council Members Have Started Pushing for Reforms
Measure ULA has not gone unchallenged. LA City Councilmember Nithya Raman, who actually supported ULA when it was on the ballot, introduced a motion calling for amendments to the tax after seeing its effects on housing production. One proposed change would offer a 15 year exemption from the ULA tax for new commercial, multifamily, and mixed use construction tied to a certificate of occupancy. That change is aimed at getting development moving again.
Mayor Karen Bass also suggested temporarily suspending the tax after the January 2025 wildfires, specifically because many Pacific Palisades homeowners who lost everything would face a large ULA bill if they tried to sell their burned lots. That proposal drew attention to the fact that Measure ULA is not just a tax on people who got rich selling trophy properties. It can hit people in difficult situations too, since the tax is based on the sale price, not on profit.
According to Matthews Real Estate Investment Services, more than 1,000 active listings in Los Angeles fall within or near the current ULA tax thresholds as of early 2026. The uncertainty around potential reforms is one reason many owners in that range are still hesitant to list.
Exemptions That Exist and How to Find Out If You Qualify
There are some exemptions built into Measure ULA that sellers should know about. The ULA tax does not apply if the buyer is a qualified affordable housing organization under the Los Angeles Municipal Code. That includes nonprofit entities with a history of affordable housing development, community land trusts, and limited equity housing cooperatives. Public agencies may also qualify for an exemption depending on the nature of the transaction.
If you are a seller whose buyer is a nonprofit or community land trust purchasing the property for affordable housing purposes, that sale may be exempt from the ULA tax entirely. It is worth confirming with a real estate attorney or tax professional before assuming anything, since the exemption requirements are specific and the city has its own approval process.
For more context on the current Los Angeles real estate landscape and why the city remains a strong market despite challenges like ULA, read our post on why we love Los Angeles and our local buyers community. You can also learn about how to position your property competitively in this market by reading our guide on how living near Metro transit lines affects LA property values.
And if you are wondering whether now is the right time to sell or whether to hold, take a look at our post on why Los Angeles is still the best place to invest in 2026. When you are ready to talk through the specifics of your situation, reach out through our Contact Us page.
Conclusion
Measure ULA was sold to voters as a tax on mansions, and for strictly residential single family sellers under a few million dollars, that description more or less holds up. But the full picture is more complicated. The tax applies to every property type in the City of Los Angeles, it is based on sale price rather than profit, and the cliff at $5.3 million creates real planning challenges for sellers near that number. Research from UCLA, RAND, and Harvard all point to the same conclusion: the tax has slowed down exactly the kind of property transactions that would create more housing. Reforms are in discussion but have not passed yet. If you are selling any kind of property that might come close to or over that threshold, knowing how Measure ULA works before you list is one of the most important things you can do to protect your net proceeds.
Frequently Asked Questions
Does Measure ULA only apply to single family homes over $5 million in Los Angeles?
No. Measure ULA applies to all real property types in the City of Los Angeles including apartment buildings, commercial properties, mixed use buildings, and land for development. Any sale above $5.3 million triggers the 4% ULA tax, and any sale above $10.6 million triggers the 5.5% rate. It is not limited to luxury single family homes.
Who pays the ULA mansion tax, the buyer or the seller?
The ULA tax is paid by the seller. It comes out of the proceeds of the sale at closing. This is an important distinction because sellers need to factor the tax into their net proceeds calculation before deciding when and whether to sell.
How much money has Measure ULA raised for affordable housing?
Through the end of 2024, Measure ULA had raised approximately $480 million in total according to the LA Office of Finance. While that is a meaningful amount, it falls well short of the $600 million to $1.1 billion annually that supporters projected when the measure was on the ballot in 2022.
Are there any exemptions to the Measure ULA tax for sellers?
Yes. The ULA tax does not apply when the buyer is a qualified affordable housing organization, a community land trust, or a limited equity housing cooperative with a history of affordable housing development. Public agencies may also be exempt in certain transactions. Sellers should confirm with a real estate attorney whether a specific sale qualifies for an exemption.
Is there any chance Measure ULA gets reformed or repealed in Los Angeles?
There is ongoing discussion about reforming the tax. City Councilmember Nithya Raman introduced a motion to amend ULA to include a 15 year exemption for new development projects. Additionally, a statewide ballot measure backed by the Howard Jarvis Taxpayers Association could limit transfer taxes across California if passed. The future of ULA is genuinely uncertain, and sellers near the threshold may want to monitor these developments before deciding to list.