Los Angeles mansion tax stalls thousands of homes and cuts construction jobs
A report finds that LA's "mansion tax" has prevented the construction of about 9,100 homes, eliminated roughly 16,650 full-time construction jobs and generated only $1.2 billion in revenue, far below expectations.
Los Angeles' United to House LA (ULA) transfer tax, dubbed the "mansion tax," was expected to raise $900 million annually but has collected roughly $1.2 billion since its April 2023 launch. The levy, championed by councilwoman Nithya Raman, applies a 4% charge on property sales over $5.4 million and 5.5% on sales above $10.9 million, affecting not only luxury homes but also apartments, offices, warehouses and vacant land.
RAND's analysis shows the tax reduced high-value property transactions by about 31% and cut apartment and commercial sales by more than 46%, leading to an estimated loss of 9,100 new homes—about 1,000 of which would have been affordable—plus 16,650 full-time construction jobs and $452 million in revenue. The city has spent only $114 million of the revenue, while allocating $466.6 million for affordable housing, most of it from ULA.
Critics, including real-estate brokers and economists, say the added cost makes many projects financially unviable, and a UCLA-USC study links the tax to a sharp decline in high-price sales. Raman has proposed exempting new multifamily and commercial projects for 15 years, but the amendment failed to reach the ballot.
Why it matters
The tax's unintended slowdown in housing construction threatens LA's affordable-housing goals and local employment.
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