q&a’s ABOUT measure ULA IN LOS ANGELES

ON THIS PAGE YOU WILL FIND RELEVANT INFORMATION REGARDING MEASURE ULA, OR THE “MANSION TAX.” IT’S SOURCED FROM THE COUNTY OF LOS ANGELES’ OFFICE OF FINANCE WEBSITE. BRENDAN BROWN MAKES NO CLAIMS TO THIS ACCURACY OF INFORMATION, AND HIS DISCLAIMER ON THIS INFORMATION IS LOCATED AT THE BOTTOM OF THE PAGE.

1. How often is the City’s real property transfer tax applied?

ANSWER: The City’s real property transfer tax is applicable on all documents that convey real property within the City, unlike property taxes which occur annually. The real property transfer tax is an excise tax on the privilege of selling a real property interest, not a tax on the property itself, and is calculated on the consideration or value of the real property interest conveyed.

2.  Does the City impose a real property transfer tax other than the special tax imposed under Measure ULA?

ANSWER: Yes, the City imposes a real property transfer tax on all documents that convey real property within the City.  The present tax (“Base Tax”) is computed based on the consideration or value of the real property interest conveyed at a rate of 0.45%.  The special tax under Measure ULA (“ULA Tax”) imposes an additional tax on top of the Base Tax.

3. What is Measure ULA and how does it work?

ANSWER: Measure ULA established the ULA Tax to fund affordable housing projects and provide resources to tenants at risk of homelessness.  The ULA Tax is imposed on all documents that convey real property within the City of Los Angeles when the consideration or value of the real property interest conveyed exceeds a threshold of five million dollars, or is ten million dollars or greater, respectively.  

4. What are the rate components of the Base Tax and the ULA Tax under the City’s real property transfer tax?

ANSWER: The rate components are as follows:

• The Base Tax rate of $2.25 per $500 or part thereof (“Base Rate”).

• The ULA Tax rates of, 1) 4% for properties conveyed over $5,000,000, but under $10,000,000, and 2) 5.5% for properties conveyed at $10,000,000 or more (“ULA Rates”).

• The specific language for the new rates can be found here: https://clkrep.lacity.org/onlinedocs/2022/22-1100-S2_ord_187692_1-1-23.pdf

• The chart below is summary of the rates:

Value of Property ConveyedBase Rate*ULA RateApplicable Tax Rate

> $100;  ≤ $5,000,000$2.25 / $5000%0.45%*> $5,000,000;  < $10,000,000$2.25 / $5004%4.45%*≥ $10,000,000$2.25 / $5005.5%5.95%*

*Note: the City’s Base Rate is $2.25 for every $500 or fractional part thereof. A transfer in which the value of the property conveyed is not divisible by $500 will be rounded up to the nearest $500 for the calculation of the Base Tax. This does not apply to the ULA Rate calculations, which are percentage-based.

5. When does the ULA Tax go into effect?

ANSWER: The ULA Tax is applicable to qualified conveyances of real property interests that occur on or after April 1, 2023. EFFECTIVE FOR TRANSACTIONS CLOSING AFTER JUNE 30, 2024, the new thresholds for ULA will be $5,150,000 and $10,300,000. Transactions above $5,150,000 but under $10,300,000 will be assessed a 4% tax and transactions $10,300,000 and up will be assessed a 5.5% tax. 

6. How will the City apply the April 1 effective date of the ULA Tax?

ANSWER: The City’s procedure for applying the ULA Tax is modeled on the ownership change rules under California Board of Equalization property tax rule 462.260 for all documents subject to the City’s real property transfer tax.  If a change of ownership occurred before April 1 but is received by the county for recording on or after April 1, 2023, the taxpayer will need to provide evidence of the actual transaction date to show that it actually occurred before the April 1, 2023 effective date of the ULA Tax.

7. Will the value thresholds under the ULA Tax be adjusted annually?

ANSWER: Consistent with the Measure ULA, the value thresholds of when to apply the ULA Tax and its corresponding rates will be adjusted annually based on the Bureau of Labor Statistics Chained Consumer Price Index. However, any changes in the value thresholds are not anticipated until the 2024 calendar year.

8. How will the City’s real property transfer tax be applied to properties that are situated partially within the boundaries of the City?

ANSWER: The real property transfer tax will be applied in proportion to the value of the real property interest that was transferred within the boundaries of the City.  If a valuation of the real property interest isn't available, the real property transfer tax should be applied based on the square footage of the property within the boundaries of the City, as a proportion of the total consideration or value of the real property interest conveyed.

9. How will the City handle over payments or under payments of the real property transfer tax?

ANSWER: If the City, through its compliance process, identifies a potential over payment or under payment, the City will notify the parties to the transaction of the potential overpayment or underpayment.  In cases of overpayment, taxpayers will need to file a request for refund from the Office of Finance. The Claim for Refund Application can be found here:

            https://finance.lacity.org/sites/g/files/wph1721/files/2021-04/refundclaim%20%281%29.pdf

In case of underpayment, the taxpayer will receive an invoice for the unpaid balance.

10. Are there any exemptions for the ULA Tax?

ANSWER: Yes, Measure ULA does provide exemptions for the ULA Tax.  The ULA Tax will be not be applicable on documents that convey real property within the City of Los Angeles if the transferee is described under newly added sections 21.9.14 and 21.9.15 of the Los Angeles Municipal Code (“LAMC”).  The transferee descriptions are as follows:

Qualified Affordable Housing Organizations

• A non-profit entity within Internal Revenue Code section 501(c)(3) with a history of affordable housing development and/or affordable housing property management experience

• A Community Land Trust, or Limited-Equity Housing Cooperative that has a history of affordable housing development and/or affordable housing property management experience

• A limited partnership or limited liability company wherein a recognized 501(c)(3) nonprofit corporation, community land trust, or limited-equity housing cooperative is a general partner or managing member and such 501(c)(3) nonprofit corporation, community land trust, or limited-equity housing cooperative has a history of affordable housing development and/or affordable housing property management experience, or such limited partnership or limited liability company includes a partner or member, respectively, that has a history of affordable housing development and/or affordable housing property management experience

• A community land trust or limited-equity housing cooperative partnering with an experienced non-profit organization

• A community land trust or limited-equity housing cooperative that does not demonstrate a history of affordable housing development and / or affordable housing property management experience which records an affordability covenant, consistent with section 22.618.3(d)(1)(i).b. of the Los Angeles Administrative Code, on the property at the time of the acquisition.

Other Exemptions

• A recognized 501(c)(3) entity which received its initial IRS determination letter designation letter at least 10 years prior to the transaction and has assets of less than $1 billion

• The United States or any agency or instrumentality thereof, any state or territory, or political subdivision thereof, or any other federal, state or local public agency or public entity

• Any entity or agency exempt from the City's taxation power under the California or U.S. Constitutions

• All other transactions which are exempt from the base Real Property Transfer Tax per local, state, or federal laws and regulations.

11. How will the Los Angeles Housing Department determine if a transferee qualifies under section 21.9.14 of the LAMC?

ANSWER: The Los Angeles Housing Department will be promulgating regulations to further define “history of affordable housing development” and “affordable housing property management experience” and will be publishing information on the type of documents, records, or other writings that will need to be submitted by a transferee to satisfy those definitions and be deemed a qualifying transferee under section 21.9.14 of the LAMC.

12. How will the Office of Finance determine if a transferee qualifies under section 21.9.15 of the LAMC? 

ANSWER: The Office of Finance will be publishing information on the type of documents, records, or other writings that will need to be submitted by a transferee to be deemed a qualifying transferee under section 21.9.15 of the LAMC.

13. How will the City administer the ULA Tax exemption to those applicable documents that convey real property within the City of Los Angeles?

ANSWER: To request a determination of an entity's exemption from the ULA Tax, please contact us at finance.ula@lacity.org. Once the appropriate documentation has been provided and a determination of exemption has been made, the Office of Finance will provide a letter certifying that transactions where the entity is the buyer/transferee are exempt from the tax. The letter is good for one year from the date of the letter.

If a transaction has already occurred and the tax was paid, but the buyer subsequently believes it qualifies for an exemption, they will need to file a refund claim using the form noted above.