Is the New Mansion Tax Hitting Los Angeles Homeowners Hard?

1. Is the New Mansion Tax Hitting Los Angeles Homeowners Hard? "I need to sell my house fast in Los Angeles, CA, but I'm curious about the new Mansion tax." In early 2023, Los Angeles experienced a surge in luxury real estate deals ahead of the arrival of Measure ULA, commonly known as the 'mansion tax,' which came into effect on April 1. This tax, in addition to regular property and capital gains taxes, applies to homes sold after that date. If you're a Los Angeles homeowner with questions about this tax, don't worry – we're here to provide answers! What Is the New Mansion Tax in Los Angeles? Los Angeles voters approved Measure ULA, known as the Homelessness and Housing Solutions Tax, in November 2022. This Measure amended Los Angeles Municipal Code § 21.9.2, also called the Real Property Transfer Tax Ordinance. The primary goal of Measure ULA is to generate revenue for affordable housing and homelessness prevention. Initially estimated to raise over $1.1 billion, it's now projected to yield $672 million. The tax will continue until Los Angeles voters decide to repeal it. How Does the LA Mansion Tax Work? The mansion tax applies a 4 percent tax to property sales of $5 million or more and a 5.5 percent tax to properties sold for $10 million or more. Who Pays the Los Angeles Mansion Tax? Sellers are responsible for paying the mansion tax. For example, on a $10 million home, this means an additional $550,000 tax, regardless of whether you profit from the sale. Is This Local Tax Deductible? Federal tax deductions for state and local taxes (SALT) are currently capped at $10,000, regardless of your marital status. If you're facing a transfer tax starting at $200,000 for a $5 million home, it's unlikely to yield a useful federal tax deduction. Are There Any Exemptions for the ULA Tax? Yes, as per Los Angeles office of finance, measure ULA offers exemptions. The ULA Tax won't apply to real property transactions in the City of Los Angeles if the transferee falls under newly added sections 21.9.14 and 21.9.15 of the Los Angeles Municipal Code ("LAMC"). Will the ULA Tax Value Thresholds Be Adjusted Annually? According to Measure ULA, the value thresholds for applying the ULA Tax and its corresponding rates will be annually adjusted based on the Bureau of Labor Statistics Chained Consumer Price Index. However, changes in these thresholds are not expected until the 2024 calendar year. Will the Mansion Tax Keep Pace With Inflation? As per Forbes, there is one silver lining to this situation: the $5 million and $10 million thresholds will be adjusted annually to account for inflation. This adjustment aims to prevent the

2. average homeowner in Los Angeles from falling into the tax bracket due to property appreciation in the coming years. It's important to mention that this newly introduced mansion tax comes on top of the existing 0.56% combined documentary transfer taxes that apply within the City and County of Los Angeles (including a 0.11% County Documentary Transfer Tax and a 0.45% City Documentary Transfer Tax). As a result, it represents a substantial increase in the overall expenses associated with real estate transactions in Los Angeles. Having Trouble Selling Your House in Los Angeles? We get it; selling your home is a big deal. That's where Sell House Fast Net comes in –we buy houses in Los Angeles, CA, for cash, no matter their condition or the situation you're in. You won't have to stress about paying us commissions or covering closing costs. Plus, we can take care of all the repairs and even assist with the moving process. Author Bio: The author is one of the top cash home buyers in Los Angeles, CA, and has been helping distressed homeowners for years. They specialize in linking homeowners with reputable cash buyers who can expedite property purchases. For details, visit https://www.sell-house-fast.net/