Selling Property in LA? Price In the ULA Tax Before You Sign

If you own real estate in the City of Los Angeles and a sale is anywhere on the horizon, there is one number worth knowing before you talk to a broker: the Measure ULA threshold. Cross it, even by a dollar, and a tax of 4% or 5.5% applies to the entire sale price. For a property selling in the mid millions, that can mean a six figure bill that never shows up in a typical listing conversation.

Measure ULA, often called the "mansion tax," was approved by Los Angeles voters in 2022 and applies to transfers on or after April 1, 2023. Despite the nickname, it is not limited to luxury homes. It applies to residential and commercial property alike, which means apartment buildings, retail centers, industrial sites and office buildings are all in scope once the price crosses the line.

Where the tax applies

Measure ULA is a City of Los Angeles tax. It does not apply across all of Los Angeles County. A property in Santa Monica, Beverly Hills, Burbank or an unincorporated area is outside the City and is not subject to ULA, although those places have their own transfer tax rules. Mailing addresses can be misleading here. A "Los Angeles" address is not always inside City limits, so confirm the jurisdiction from the parcel record rather than the street address.

The thresholds and rates

For sales closing on or after July 1, 2026, the City's thresholds are approximately $5.4 million for the 4% rate and $10.9 million for the 5.5% rate, up from $5.3 million and $10.6 million in the prior year. The City adjusts these figures every July 1 for inflation, which is why a figure you heard last year may no longer be right. Always check the City of Los Angeles Office of Finance for the exact threshold that applies to your closing date.

ULA sits on top of the transfer taxes that already existed. The City's documentary transfer tax is 0.45% of the price, and together with the County's tax the combined base is about 0.56%. Those older taxes are generally calculated on the price excluding any liens assumed by the buyer, while ULA is calculated on the gross price.

Why the threshold works like a cliff

Most people are used to taxes that work like income tax brackets, where a higher rate only applies to the dollars above a line. ULA does not work that way. Once a sale reaches the threshold, the rate applies to every dollar of the price. That creates a zone just above each threshold where a higher sale price actually leaves the seller with less money.

The illustration below uses round numbers and the approximate 2026 thresholds. It ignores broker commissions, escrow fees and income tax, and it assumes no liens are assumed by the buyer.

In this illustration, selling for $5.6 million leaves the seller about $15,000 worse off than selling for $5.39 million, despite a price that is $210,000 higher. At the upper threshold, an extra $200,000 of price produces only about $26,000 of extra proceeds. Illustration only, not a forecast. Your own numbers will depend on the exact threshold on your closing date, your costs and how the deal is structured.

Who pays and how it affects negotiations

In practice, ULA is generally treated as a seller cost, paid at closing through escrow alongside the existing transfer taxes. Because it reduces proceeds so sharply near the thresholds, it shapes negotiations in a few predictable ways. Sellers with a property valued just above a threshold often find buyers are reluctant to pay the extra needed to make the seller whole. Buyers who understand the cliff sometimes use it as leverage, offering just under the line. And sellers sometimes reprice a listing downward to land below a threshold, accepting a lower headline price in exchange for better net proceeds.

Any pricing decision needs to reflect the real transaction. Splitting a sale into separate pieces, shifting value into side agreements or moving personal property into the price to stay under a line can attract scrutiny if the arrangement does not reflect economic reality. If a structure only exists to avoid the tax, it is worth assuming the City will look closely at it.

What to do before you list

• + Confirm the property is inside City of Los Angeles limits using the parcel record.
• + Get a realistic valuation range and see where it sits relative to the threshold in effect for your likely closing date.
• + Model net proceeds at several prices around the threshold, including ULA, the existing transfer taxes, commissions and income tax on the gain.
• + Think about timing. Because thresholds move each July 1, a closing date on one side of that date can change the math.
• + If you own the property through a business or partnership, look at how the sale proceeds and the tax on the gain flow through to each owner.

Common mistakes we see

The most expensive mistake is setting a list price without running the ULA math at all, then discovering the tax once an offer is on the table. The second is relying on last year's threshold. A third is assuming a Los Angeles mailing address means the property is subject to ULA, or the reverse. Finally, many sellers focus only on the transfer taxes and forget the income tax on the gain, which for a long held property can be the larger number. Both belong in the same model, because the right price is the one that maximizes what you keep after all of them.

Exemptions exist for certain qualifying nonprofit and affordable housing organizations, but they are narrow and have specific requirements. Most private sellers and investors should assume the tax applies once the price crosses the threshold.

Frequently asked questions

Does Measure ULA apply outside the City of Los Angeles?

No. It applies to property inside City of Los Angeles limits. Other cities in Los Angeles County, and unincorporated areas, are not subject to ULA, although they may have their own transfer taxes.

Is the tax calculated on the whole price or only the amount above the threshold?

On the whole price. Once a sale reaches the threshold, the 4% or 5.5% rate applies to the full consideration, which is why prices just above a threshold can leave a seller with less than prices just below it.

Do the thresholds change every year?

Yes. The City adjusts them for inflation each July 1. Confirm the threshold in effect on your actual closing date with the City of Los Angeles Office of Finance rather than relying on a figure from a previous year.

How Kelly+Partners can help

Before you list, a Kelly+Partners Advisor can model your net proceeds at different prices and closing dates, combining Measure ULA, the existing transfer taxes and the income tax on your gain, so you can set a price with your eyes open. Book a discovery meeting.

This article is general information only and is not tax, legal or financial advice for your situation. Speak with a Kelly+Partners Advisor before acting on it.