Celebrate Valentine’s Day with the Keyes Real Estate team at the grand opening party of our newly renovated westside office located at 15113 W Sunset Boulevard, in the heart of the Pacific Palisades.
WHEN: Tuesday, February 14th, 4-7pm
WHERE: 15113 W Sunset Blvd, Ste 3, Pacific Palisades
The Cities of Los Angeles, Santa Monica, & Culver City will be imposing an additional transfer tax on the sale of certain valuable residential and commercial properties, which will take effect at various times throughout the first half of 2023. The revenue raised is intended to be used to fund affordable housing and tenant assistance programs. Below is a breakdown of when these transfer taxes go into effect:
- In the City of Los Angeles, Measure ULA will take effect on April 1st, which will levy an additional tax on the sale of certain real property (either residential or commercial). For properties sold for $5 million, but less than $10 million, the tax will be 4% of the total value; for properties sold for $10 million or more, the tax will be 5.5% of the total value.
- In the City of Culver City, Measure RE will also take effect on April 1st, which will levy an additional tax on the sale of certain real property (either residential or commercial). For properties sold for at least $1.5 million, but less than $3 million, the tax will be 1.5% of the value; for properties sold for $3 million, but less than $10 million, the tax will be 3% of the value; and for properties sold for $10 million or more, the tax will be 4% of the value.
- And in the City of Santa Monica, Measure GS will take effect on March 1st, which will levy an additional tax of 5.6% on the sale of certain real property (either residential or commercial) worth $8 million or more.
SO THE QUESTION IS: NOW WHAT?
We believe the passage of these takings – yes, we said takings – will be counterproductive, as it will discourage development, encourage sellers to keep their properties as rentals to avoid a ridiculously high gross sales tax, and, ultimately, discourage future investment in these cities. Remember, this affects ALL real estate classes – not just residential housing. The net effect will be higher rent for tenants and higher prices for consumers in a metropolitan area that is already facing a dramatic shortage of dwelling units – both for rent and for sale – and struggling to recover from the pandemic.
It is important to note two things:
- This new tax would be IN ADDITION to the existing documentary transfer taxes imposed, which are not insignificant.
- Angelenos already paid $1.2 billion in taxes after the passage of Measure HHH – designated to address homelessness. Even with this significant war chest, politicians still have failed to deliver.
And these measures are not just taxing ultra-luxury properties – the City of Culver City is taxing properties starting at $1.5 million. Over time, these measures will expose every real estate owner in the Los Angeles area to additional taxes.
We are in full support of efforts to end the homelessness crisis in Los Angeles and surrounding cities, however, “the road to hell is paved with good intentions,” and we believe that these additional transfer taxes will cause more harm than good in the long run, and potentially exacerbate the homelessness crisis rather than solve it.
One shining light at the end of the tunnel is that Measure ULA is being challenged in Superior Court by the Howard Jarvis Taxpayers Association and the Apartment Association of Greater Los Angeles, citing “the state constitution prohibits cities or counties from designating real estate transfer taxes for special purposes.” Let’s hope they are successful.
As always, we are real estate advisors first, so if you have any questions about the above information or the real estate market in general, be sure to reach out. We’d love to chat!