“Mansion Tax” Will Impose A 4% Tax On Home Sales Over $5 Million (Representative Image)
Some of Hollywood’s biggest stars are rushing to sell their ultra-luxury apartments ahead of April 1, when Los Angeles’ new “mansion tax” goes into effect, the New York Times reported. Jim Carrey, Britney Spears and Kylie Jenner are among the celebrities who have put their sprawling properties on the market in recent months.
While Jim Carrey listed his 12,700-square-foot home for $29 million in February, Britney Spears listed her 11,650-square-foot home in Calabasas for $12 million. Meanwhile, Kylie Jenner has put her Beverly Hills home up for sale for more than $33 million.
The race now is to lock in profits and close a sale before the new tax comes into effect.
“It’s generated some excitement as people try to beat the April 1st date and there are plenty of opportunities for buyers looking for value,” Tyrone McKillen, a broker at luxury agency Official, told the NY Times .
What is the manor tax?
According to the Independent, the tax called Measure ULA, which is levied on high-value real estate, will require sellers of homes over $5 million to pay a 4 percent real estate transfer tax, while sales over $10 million will require 5, 5 percent tax will be paid cents. The new tax is in addition to the city’s current property transfer tax of 0.45%. In addition, the tax must always be paid by the seller.
According to CNBC, the tax is levied based on selling price and not profit, meaning sellers must pay even if they’re already making a loss. For example, a homeowner is willing to take a $6 million loss on their 16,700-square-foot home just to miss the looming deadline.
The city is aiming to raise up to $1 billion from the sale of these luxury homes, and the proceeds will be used for public housing to help tackle the homelessness crisis. The ULA tax was designed to “fund affordable housing projects and provide funds to renters at risk of homelessness,” according to the City of Los Angeles website.
In 2022, an estimated 42,000 people were homeless, according to the Los Angeles Homeless Services Authority, compared to 28,000 in 2016.
While the city’s rich and wealthy residents have criticized the tax bill, many civil rights advocates see the law as a positive move.
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