The City of Los Angeles’s “mansion tax” on all property over $5.15 million has led to an over 70% decrease in affected sales, resulting in significant foregone property tax revenue, according to a research preview of county assessor data from Commonwealth Title.
Mott Smith, a real estate development professor at the Sol Price School of Public Policy at the University of Southern California, analyzed the effect of Measure ULA, a voter-approved tax that was marketed as a “mansion” tax to fund social services, but applies to all real estate — including offices, industrial space, shopping centers, and multifamily buildings.
Smith found affected sales dropped by over 70% since April of 2023, when the measure took effect, with a worse decline for multifamily, commercial, and industrial space, while sales increased in the rest of the county and continued as normal for properties under the threshold.
Smith says the impact of reduced sales means less tax revenue now and in the long term, which could require the city and county to scale back essential services, as growing deficits leave the state without the ability to provide any bailouts.
“Everything from schools to police and fire to other social services are funded primarily through property tax receipts,” said Smith in an interview with The Center Square. “What Measure ULA appears to be doing is reducing property tax growth in Los Angeles County because of a bad policy in Los Angeles City at a time of probably the greatest fiscal strain we’ve seen in maybe eight to ten years.”