Mansion Tax in Trouble
The mansion tax aka Measure ULA went into effect on April 1st. Voters approved the 4% additional tax on transactions over $5 million. The tax targets residential and commercial property sales. However, it appears there are some troubles on the horizon for the mansion tax.
According to a report in Globe Street by Jack Rogers, the City Administrative Officer Matt Szabo warned the city not to spend the money earned from the tax. Currently, there are several lawsuits filed. One such lawsuit is filed by the Apartment Association of Greater Los Angeles and the Howard Jarvis Taxpayers Association citing that the measure was illegal according to the California State Constitution which prohibits cities or counties from designating real estate transfer taxes for special purposes.
Is the tax measure worth it? Proponents of the tax promoted on the ballet $900M per year in taxes. The City Administrative Office cites only a potential $672M in potential revenue. Some would speculate this will be even lower given higher interest rates and increased taxes.
Voters are also taking action in the “Taxpayer Protection Act” which will be on the ballot in 2024. It calls for a new requirement for two-thirds approval of state referendums that impose any new local special tax increases. This will limit the ability of a simple majority to continually increase taxes.
What are your thoughts on the Measure ULA lawsuits? Are you a fan of the tax? Do you think we are over taxed in California? Please leave your comments below.
As always, if you need help buying selling or investing in real estate, please reach out.