Policy does not have to be scary. If you plan to sell or buy a high-end home in Los Angeles, the city’s transfer tax known as Measure ULA is now part of the playbook. With a clear plan, you can protect your net proceeds, time your move, and negotiate with confidence.
Why this tax reshapes luxury deals
Measure ULA is a city real property transfer tax that began on April 1, 2023. It adds a sizable cost to high-price closings and funds housing and homelessness programs. That added cost changes how luxury homes are priced, when they list, and how deals are structured. The good news is you can model the impact and make smart choices before you go to market.
Set your mindset this way: understand the rule, verify the thresholds for your closing date, and build your timing and pricing around it. A little preparation can mean a smoother sale with fewer surprises.
What the transfer tax changes mean
ULA sits on top of the city’s normal documentary transfer tax. It applies when a sale price crosses set thresholds that the city adjusts each year. You will see the charge on your settlement statement at closing.
Who is affected and timing
- For transactions closing on or after July 1, 2025, the city lists two thresholds: 5,300,000 dollars and 10,600,000 dollars. If your sale lands above the lower threshold, a 4 percent ULA tax applies. If it is at or above the higher threshold, a 5.5 percent ULA tax applies. These ULA rates apply to the entire sale price, not just the portion above the threshold. The city also has a base documentary transfer tax of 0.45 percent that applies to all sales in Los Angeles. Always confirm the current thresholds and effective date for your closing window with the City of Los Angeles Office of Finance because they update annually according to the Office of Finance FAQ.
- Escrow and title companies typically calculate and collect city transfer taxes at recording. It is standard in Los Angeles for the seller to pay city transfer taxes, but the purchase agreement controls economics and parties can negotiate who pays what at closing per the Office of Finance overview.
Quick examples using the current city figures:
- If you sell for 6,000,000 dollars inside the City of Los Angeles, the 4 percent ULA portion would be 240,000 dollars. The 0.45 percent base city tax would be 27,000 dollars. The combined city component equals about 4.45 percent, or 267,000 dollars. Buyers and sellers may also owe county transfer tax, which escrow will calculate separately.
- If you sell for 11,000,000 dollars inside the City of Los Angeles, the 5.5 percent ULA portion would be 605,000 dollars. The 0.45 percent base city tax would be 49,500 dollars. The combined city component equals about 5.95 percent, or 654,500 dollars.
How costs appear at closing
On the settlement statement, you will see line items for the City of Los Angeles transfer tax and the County documentary transfer tax. Escrow collects and remits these when the deed records. While custom often places city transfer taxes on the seller side, buyers and sellers sometimes split or re-price to address the impact. Treat it as a negotiable cost in your net sheet.
Nuances and possible exemptions
Not every transfer is taxable. The city lists exemptions for certain government and nonprofit transfers and other base-tax exemptions. There are also rules for foreclosures and deed-in-lieu situations. Because the rules include edge cases and there has been litigation and refund requests, it is wise to have your CPA and attorney confirm whether any exemption applies to your deal see City resources and legal guidance referenced by Nossaman and the city’s program page here.
Market shifts since enactment
The luxury market adjusted fast after ULA began. Several patterns stand out in the data and in the field.
Listing volume and timing patterns
Sales above the 5 million dollar mark inside Los Angeles fell sharply in the first year. Local reporting found sales above 5 million dollars dropped roughly 68 percent in the 12 months after the tax took effect compared with the year before, while nearby cities such as Beverly Hills and Santa Monica saw smaller declines. There was also a rush to close before April 1, 2023, which inflated the prior period as reported by the Los Angeles Times and industry analyses.
Owners also changed behavior. Some delayed selling to avoid the tax, which reduced inventory at the top end. Others moved listings to neighboring cities that do not charge the same tax, shifting some demand across borders per the Los Angeles Times.
Pricing and negotiation dynamics
The new cost has shown up in list-to-sale spreads. In some deals, sellers trimmed list prices or offered credits that roughly matched the ULA burden. In other cases, buyers accepted higher prices but asked for concessions elsewhere, like repair credits or flexible possession, to balance the economics. Market practice remains negotiable, and the split varies by leverage and property uniqueness see legal-market commentary.
At the very top of the market, reporters have noted larger discounts and longer days on market for trophy homes. Keep in mind that interest rates, insurance costs, and general luxury cycles also play a role, so do not pin every price move solely on ULA media coverage example.
Segment differences to consider
Effects differ by product type and price band. Ultra-luxury single family trades often have unique buyer pools and global demand. High-end condos can face different velocity. Investment and development sales show their own patterns. Researchers have linked ULA to lower transaction counts in commercial, industrial, and multifamily segments, which matters for the pipeline of future housing UCLA Lewis Center.
Strategies for high-end sellers
Preparation, pricing, and timing
- Start 60 to 120 days before you list. Complete inspections, staging, photography, and a full pricing study that includes ULA-aware comps and current absorption.
- Anchor your price to recent, relevant sales that closed under ULA. Build a range that anticipates likely concessions.
- Choose timing with your life events in mind and verify the city thresholds that apply to your projected close date. Thresholds are CPI-adjusted annually Office of Finance.
Concessions, credits, and net proceeds
- Model 3 to 4 offer scenarios that vary price, closing date, credits, and who pays transfer taxes. Compare net proceeds rather than fixating on the top-line price.
- If you receive international or cash offers with faster closes, weigh the time value of money against higher-priced offers with longer contingency periods.
Off-market versus on-market paths
- Off-market can deliver privacy and speed, but may reduce competitive tension. Use it when discretion is essential or when your buyer pool is clear.
- On-market exposure maximizes reach. If you go public, use a launch plan that compresses showings into a tight window to drive urgency.
Coordinate tax and legal planning
- Engage your CPA and attorney early. Confirm entity structure, potential exemptions, and any trust or estate considerations.
- Align the sale with capital gains planning, 1031 options if applicable for investment property, and cash-flow timing for your next purchase.
Buyer opportunities and risks
Negotiation levers in this climate
- Some sellers will trade price for speed or certainty. Strong proof of funds, limited contingencies, and flexible possession can unlock value.
- If a listing has aged, target terms that ease the seller’s tax pain, such as a price that reflects the ULA hit or credits on repairs. Let the seller save face while improving your basis.
Financing and contingency strategy
- Match your contingency length to the property complexity and title structure. Trophy estates with unique features may require added diligence but can still close quickly with the right prep.
- Secure underwriting early. Luxury loans can require more documentation. Do not let financing lag your negotiation timeline.
Diligence on ownership structures
- Review title and entity ownership up front. Some estates involve trusts, LLCs, or cross-border issues. Confirm signers, authority, and any conditions that could slow closing.
- If you plan improvements, verify local permitting timelines and carry costs. Broader transaction slowdowns can ripple into development schedules UCLA Lewis Center research.
Legal outlook and what to watch
Current status and updates
- The city collects ULA and tracks revenue through a public dashboard. Totals change monthly, so rely on the latest city data for figures and program allocations Los Angeles Housing Department.
- Litigation and guidance updates have influenced how funds are reserved and allocated early on. The city has continued implementing programs while monitoring legal risk overview example.
What could change next
- Thresholds will continue to adjust each year with CPI. Watch for any administrative clarifications or policy refinements affecting exemptions or development transactions Office of Finance.
- Expect continued debate about economic effects. UCLA researchers estimate that permitting for 20-plus unit multifamily projects fell about 18 percent, or roughly 1,910 fewer apartments per year, after ULA, and they discuss targeted reforms to reduce unintended impacts UCLA Lewis Center. Supporters argue broader headwinds like rates and construction costs also matter. Track new data as it is released.
How an advisor optimizes your outcome
Scenario modeling and valuation
Your best protection is a clear model. We build net sheets that compare price, credits, close dates, and who pays which taxes. We stress-test several paths, such as a slightly lower price with faster close versus a higher price with more contingencies, so you pick the path that fits your goals.
Curated vendor and escrow team
High-end deals move best with a tight bench. A seasoned escrow officer, a responsive title team, a CPA who knows entity and trust issues, and an attorney who can pressure-test any exemption can save weeks. This coordination reduces renegotiations and keeps your leverage.
Discretion, timing, and execution
We plan the calendar, set communication rules, and direct showings to create momentum. If privacy is a priority, we can run a quiet campaign first, then pivot to a broad launch if needed. Throughout, we keep you anchored to your net proceeds and timeline.
Plan your next move confidently
Measure ULA adds complexity, but it does not have to derail your goals. With smart planning, you can control timing, protect your net, and negotiate with clarity. If you want a private valuation, scenario modeling, and a step-by-step plan tailored to your situation, connect with Michael directly. Get your free home valuation and book a strategy session with Michael Ferrera.
FAQs
Does Measure ULA apply to my property and price point?
- If your closing occurs inside the City of Los Angeles and the price exceeds the city’s current threshold for your close date, ULA applies to the entire price. Verify the latest thresholds and timing with the city before you list or offer Office of Finance FAQ.
Who typically pays the ULA tax at closing?
- In Los Angeles, sellers customarily pay city transfer taxes, but contracts can allocate costs differently. Treat it as a negotiable term and compare net proceeds for different structures Office of Finance.
How much revenue has the city collected so far?
- Totals change monthly. Check the city’s dashboard for the most current figure and program allocations LAHD ULA Dashboard.
How has ULA affected luxury sales volume?
- Reported sales above 5 million dollars inside the city fell sharply in the year after ULA began, with local reporting citing about a 68 percent drop compared with the prior year. Nearby cities saw smaller declines Los Angeles Times and industry data.
Are there exemptions or ways to reduce the tax?
- Some transfers are exempt, and there are rules for certain nonprofit, government, affordable housing, and foreclosure situations. Have your CPA and attorney evaluate your specific facts against city guidance Nossaman overview and the city’s program page here.
Does ULA affect new housing supply or investment sales?
- UCLA researchers link ULA to fewer investment transactions and estimate an 18 percent drop in multifamily permits for 20-plus unit projects, about 1,910 fewer apartments per year, while supporters note other headwinds like high rates also matter UCLA Lewis Center.
Where can I confirm the current thresholds and rules?
- The City of Los Angeles Office of Finance keeps the official thresholds, rates, and FAQ. Check those pages before listing or writing an offer to make sure your figures match your expected close date Office of Finance.
