L.A. City “Proposition ULA” has passed: An additional, new “transfer tax” will start on April 1, 2023, which is imposed at the time of sale. Both current and these new transfer taxes apply whether or not there is profit from a sale. The new, additional, “transfer tax” rate is 4% starting with the first dollar for a sale in excess of $5MM, and 5.5% starting with the first dollar for sales of $10MM or more. The current rate of $5.60/thousand – which is approximately 1/10th of the new tax rate, remains in place.
Prior to April 1, 2023:
$5,000,000 sale: City and County Transfer Taxes are $28,000.
$10,000,000 sale: City and County Transfer Taxes are $56,000.
$20,000,000 sale: City and County Transfer Taxes are $112,000.
On or after April 1, 2023:
$5,000,000 sale: City and County Transfer Taxes will be $228,000.
$10,000,000 sale: City and County Transfer Taxes will be $606,000.
$20,000,000 sale: City and County Transfer Taxes will be $1,212,000.
Home sales are usually not tax-driven. However, if your property is in Los Angeles and worth $5,000,000 or above, and you were planning to sell in 2023, you may want to consider selling prior to April 1, 2023 to avoid this additional tax. A sale may be structured to allow for the seller to remain in the residence after closing, usually for up to 2 months, in order to dovetail better with relocation timing, yet still accommodate closing prior to the April 1, 2023 trigger date.
If you are interested in learning more about this new tax, understanding current market conditions, or if you would like to chat about opportunities we would be delighted to talk to you.
