LA’s “mansion tax,” offered to Angelenos as a method to tax the wealthy and enhance housing, has instead blocked the building of 9,100 properties, wiped out 16,650 full-time construction jobs and price $452 million in income.
A damning new report says the tax, formally recognized as United to House LA, or ULA — has had a adverse impression on the metropolis’s high-end and multi-family real estate markets and collected less than half what it was expected to generate to deal with the metropolis’s housing disaster.
The ULA was expected to raise about $900 million a yr, or $2.7 billion over its first three years. Instead, it introduced in about $1.2 billion.
Beverly Hills realtor Danny Brown spoke about the pitfalls of the “mansion tax” imposed on properties on the market over $5 million. Andy Johnstone for CA Post
The tax — which went into impact in April 2023 and was championed by socialist mayoral hopeful Councilwoman Nithya Raman — means if a property in LA sells for more than $5.4 million, the vendor is taxed 4% of the price at closing. If it sells for more than $10.9 million, it will increase to 5.5%.
Despite its nickname, LA’s “mansion tax” applies far beyond luxurious properties. Apartment buildings, workplaces, warehouses and vacant land can all set off the tax if they promote above the thresholds.
About 1,000 of the 9,100-plus new properties lost would have been reasonably priced items — the very factor the tax was supposed to create — according to RAND company, a non-partisan, nonprofit analysis group.
Westside real estate broker Danny Brown advised The California Post the tax was ”another catastrophe initiated by the incompetent socialists who run our metropolis.”
“ULA has chopped the legs from under the residential and commercial real estate industry, which is one of the largest parts of our city’s economic engine,” Brown said.
Prominent westside property broker Danny Brown said the ULA tax continues to hammer the market. Andy Johnstone for CA Post
Mayor Karen Bass did not take a place on the mansion tax, but Raman has since said she was in favor of reforming the tax.
RAND discovered the ULA slashed high-value property gross sales by an estimated 31% through early 2026, with house and business gross sales falling by more than 46%.
Simply put, the tax has discouraged some house owners from promoting and builders from pursuing tasks that, because of the tax, no longer make financial sense.
“Measure ULA has the noble aspiration of delivering more affordable housing inventory to Los Angeles, but its negative repercussions may outweigh its benefits. A transfer tax of this type adds friction to the housing market and slows the number of home transactions,” Joel Berner, a senior economist at Realtor.com, advised The Post.
Realtor.com is owned by News Corp, the same guardian company that owns The Post.
Overall, $55.5 million in ULA money went toward 3,713 present affordable-housing items in the funding spherical, rather than building new ones. Google Maps
“Builders are already dealing with high costs of labor and materials, so this added expense when they go to sell a completed or revitalized project squeezes their margins even further,” Berner added. “This will lead some to decide that the deals simply are not worthwhile.”
New analysis has documented a important hit to high-value property gross sales and housing development since ULA took impact in 2023.
The tax also wiped out the equal of 16,650 full-time construction jobs and price authorities businesses $452 million in lost income, according to RAND.
And the City has barely touched the money, spending just $114 million as of May — less than 10% of the money raised. The City Council voted 13-0 last Tuesday, Raman included, to put a document $466.6 million toward reasonably priced housing, with $324 million of that — practically 70% — coming from ULA.
Los Angeles resident voted for Measure ULA, dubbed the “mansion tax,” in 2022 as a method to get ”millionaires and billionaires” to help construct low-income and homeless housing. Google Maps
But when the tax handed, Raman couldn’t stop bragging.
“This is truly the first housing initiative of its kind anywhere in the United States that will have such a widespread, immediate, and long-term impact on the housing and homelessness crisis,” she said.
One property in Brentwood, the Westside enclave long favored by Hollywood stars and professional athletes, exhibits how the tax can play out in the actual world.
The property offered for about $5.3 million in February 2023, weeks before ULA took impact.
The authentic home was torn down and changed with a new 8,990-square-foot, seven-bedroom home with a pool, screening room and visitor home. It hit the market last December at $19.995 million. After three price cuts, it’s now listed at $15.995 million.
If it sells at that price, the ULA invoice would be about $880,000.
Brown confirmed The Post around the block and said even the modest older homes next door could get hit because the land beneath them alone is value more than $5 million.
“It’s 2,000 feet. Not a mansion, even though it’s $5.5 million, because of the land it’s sitting on,” Brown said. “Sounds good to tax the millionaires and billionaires. Everyone says, ”great,” but it’s so far from actuality of what occurs.”
For builders, that further price actuality hits even more durable.
Developer Barry Cassily said ULA is a piece of a bigger assortment of measures, guidelines and taxes that make it nearly inconceivable to construct housing in Los Angeles. Andy Johnstone for CA Post
Developer Barry Cassily said builders already operate on threadbare revenue margins, and now have to issue in an further 4 to 5.5% chew out of qualifying gross sales, doubtlessly making some tasks financially unworkable.
“You are taxing housing to pay for housing,” he said.
Critics say the end result is builders have stopped building and house owners stop promoting.
Fewer gross sales also means less property tax income, because in California, a property is reassessed to its present market worth when it modifications possession.
A research by UCLA’s Michael Manville and USC’s Mott Smith, overlaying about 338,000 LA County property gross sales, has discovered a sharp decline in transactions above ULA’s threshold.
“If in the meantime, you’ve deterred hundreds or thousands of market-rate units, you have not helped affordability,” Manville, who chairs UCLA’s city planning division, advised The Post.
He called it “robbing Peter to pay Paul.”
Carolwood Estates lists a luxurious home in Brentwood. Andy Johnstone for CA Post
Manville says the report takes into account other financial elements such as high rates of interest. Researchers at Occidental College, meanwhile, argue broader financial circumstances higher clarify the decline in multifamily development.
Their evaluation suggests that the slowdown in house construction was half of a wider development affecting development, making it troublesome to isolate the tax’s impression from other financial pressures.
Jason Oppenheim, the luxurious broker who stars on Netflix’s “Selling Sunset,” claims RAND’s numbers through September show as many as 10,600 residences were deterred, against roughly 1,900 new items ULA has helped fund.
“City Hall is celebrating the housing it funds from Measure ULA while ignoring the far greater number of apartments its tax is preventing,” Oppenheim advised The Post.
Beverly Hills realtor Danny Brown said a end result of ULA is there is less housing being constructed, more jobs lost in construction, less tax income being collected and more drug-addicted zombies roaming our streets. Andy Johnstone for CA Post
Even those 1,900 items come with an asterisk, with the ULA only sometimes funding one half of reasonably priced housing tasks.
Manville in contrast the metropolis’s claim to outdated TV adverts calling Froot Loops “part of this nutritious breakfast.”
“It is a part of that breakfast,” he said. “But, like, how big of a part really?”
Raman has since tried to change the tax, proposing earlier this yr to exempt newly constructed house, business and mixed-use tasks from ULA for 15 years.
“A policy that unintentionally stalls housing production ultimately undermines the very goals voters asked us to achieve,” Raman said.
However, her proposal failed to make the June poll amid fierce opposition from labor and pro-ULA teams.
Critics say the end result is builders have stopped building and house owners stop promoting. Getty Images
Bass hasn’t been a ULA purist either.
Last yr, the mayor tried to rewrite the tax in Sacramento, then pulled the invoice at the last minute after ULA backers revolted.
Weeks later, after assembly with billionaire developer Rick Caruso, she requested the council to give Palisades fire victims a three-year break from the tax.
And some of the money isn’t building anything new.
In April, the metropolis steered $55.5 million toward preserving 3,713 present reasonably priced items. About $2 million went to 11 buildings run by SRO Housing Corp.
One of them, the 96-unit Renato Apartments, got $100,000. In a 2024 lawsuit, tenants alleged they lived with bedbugs, cockroaches, rats, sewage leaks and human waste, court papers show.
A home for sale signal is seen in entrance of a home with palm trees. Sona – stock.adobe.com
SRO Housing has lost $27.8 million since 2022 and has warned the metropolis it will collapse without more public money, Politico reported this month.
Manville said protecting present items livable isn’t robotically a dangerous use of the money.
“If for a small amount of money we can take some units that are at risk of being declared uninhabitable and keep them on the market, that could very well be a policy win,” he said.
Councilwoman Imelda Padilla, who took over the council’s new Housing Committee in August after the committee Raman chaired was damaged up, has pushed for quarterly reports on where the money goes.
“We must follow these dollars and ensure they are producing the affordable housing Angelenos deserve,” Padilla advised The Post.
ULA’s citizen oversight committee did not reply to The Post’s request for remark.
Applications for the $466.6 million funding spherical open Oct. 13 — three weeks before voters determine whether Raman gets the keys to City Hall.
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