How does Measure ULA affect selling an apartment building in Los Angeles?
Measure ULA — the "mansion tax" — adds a City of Los Angeles transfer tax on the entire gross sale price of higher-priced property: for sales closing July 1, 2026 through June 30, 2027, it is 4% on sales of $5.4M up to $10.9M and 5.5% at $10.9M and above, on top of the base city and county transfer taxes. It applies to apartment buildings, not just mansions, and it is owed whether or not the seller made a profit. The thresholds adjust for inflation every July — verify the current figures with the LA Office of Finance before pricing a sale.
Why it hits multifamily hardest.
ULA taxes gross price, not gain — a $6M building sold at a loss still owes roughly $240,000 at the 4% rate. For a seller netting a 5% spread over basis, ULA can consume most of the profit, which is why $5M+ City-of-LA listings thinned out after the tax took effect in April 2023. It also stacks: base documentary transfer taxes still apply, escrow typically charges the seller, and a 1031 exchange does not avoid it — ULA is a transfer tax, not an income tax. Any building that could plausibly trade near a threshold needs the tax modeled into net-proceeds math before it goes to market, not discovered on the estimated closing statement.
What sellers actually do about it.
Three strategies show up in real deals. First, pricing to the threshold: a building worth $5.5M may genuinely net the seller more at $5.35M, and buyers know it — the cliff creates a dead zone just above each threshold. Second, geography: ULA applies only inside City of LA limits, so an identical building in Burbank, Glendale, or unincorporated county pays nothing, which shows up in relative pricing. Third, timing and structure conversations — thresholds rise each July, and exemptions for certain affordable and nonprofit buyers exist, with more proposed. Structuring around a tax is attorney-and-CPA territory; my job is making sure the net number is right before you commit to a price.
Does ULA apply to the amount above the threshold or the whole price?
The whole price. A $5.5M sale in the current bracket owes 4% of $5.5M (~$220,000), not 4% of the amount above the threshold — which is why the cliff distorts pricing near it.
Can a 1031 exchange avoid Measure ULA?
No. A 1031 defers capital-gains tax, but ULA is a transfer tax collected at closing regardless of what you do with the proceeds. Budget for both separately.
Do Santa Monica or Culver City have their own versions?
Yes — several LA County cities have adopted their own higher transfer taxes with different thresholds and rates. Always confirm the specific city's schedule; "LA" is many taxing jurisdictions.
SHAYA LOWENSTEIN · LYON STAHL INVESTMENT REAL ESTATE · DRE #01942326 · (323) 944-2221