New California Real Property Transfer Tax Affects Much More Than Los Angeles Mansions

In November 2022, Los Angeles voters passed a special real property transfer tax, Measure ULA (commonly known as the “mansion tax”), to assist in reducing homelessness in the city.  

Measure ULA, which took effect in April, imposes a 4% real property transfer tax on sales of real property valued between $5 million and $10 million, with the rate increasing to 5.5% on sales of real property valued over $10 million. Unlike the Los Angeles documentary transfer tax (DTT) that reduces the tax base for property-level debt assumed in connection with a transfer, the ULA tax applies to the full value of the real property transferred. Further, the ULA tax is not graduated, meaning that the applicable rate is imposed on the entire amount of the consideration or value of the property. 

The ULA tax is incremental to the Los Angeles DTT that has historically been imposed. Moreover, it affects all types of real property, including commercial, industrial, and residential, which is contrary to it being referred to as a mansion tax. 

While the Los Angeles Department of Finance has updated its website with helpful FAQ that address many ULA-related topics, numerous questions remain, including:  

  1. Will the ULA tax apply to transfers of ownership interests in legal entities (commonly called a “controlling interest transfer tax”)? 
  2. Do the exemptions that apply to the Los Angeles DTT also apply for the new tax?  

Under the measure, the Director of Finance has authorization to issue rules and regulations for implementing the ULA tax. Practitioners and taxpayers hope that additional guidance addressing any outstanding questions will be issued soon. 

There is an added layer of uncertainty for Los Angeles taxpayers: Measure ULA is subject to two California constitutional challenges in Los Angeles Superior Court – one asserted by The Howard Jarvis Taxpayers Association and Apartment Association of Greater Los Angeles (filed December 22, 2022), and the other by Newcastle Courtyards LLC (filed January 3). BDO’s real property transfer tax team will continue to monitor the status of those cases. 



  •  BDO’s real property transfer tax team assists clients nationwide with the acquisition and disposition of real property, including by exploring tax mitigation strategies. The team also has vast experience analyzing real property transfer tax provisions that may apply to the transfer of a legal entity that holds real property, which are often nuanced and have minimal guidance.
  • If you plan to engage in a transaction that could trigger the new ULA tax, please reach out to BDO’s real property transfer tax team to understand the implications of the transaction and whether mitigation strategies may apply.