Los Angeles Mansion Tax Revenue So Far vs. Forecasts
Although the Los Angeles mansion tax crossed $1 billion in total collections by January 2026, the pace has remained far below early promises.
City reports $944 million in 30 months, about $378 million a year.
That matches $280 million to $350 million estimates and trails lofty forecasts.
The tax applies to sales of $5 million or more, with rates of 4% to 5.5%.
Other states are facing similar pushback as outdated thresholds pull more middle-class homes into luxury-style taxes.
Revenue Reality
Supporters projected $600 million to $1.1 billion yearly, or $1.5 billion over 30 months.
Revenue lagged in early 2023, then steadied, as the council set $424.8 million for 2025 to 26.
Peer comparisons and Public perception
Peer comparisons with other big city housing funds underscore the gap.
Public perception has shifted as $5 million-plus sales fell 55 percent, transactions dropped 38 percent, and luxury remodels rose 46 percent.
Those trends have suppressed tax-generating turnover overall.
How the ULA Mansion Tax Works (Rates, Cutoff, Exemptions)
Two surcharge tiers now drive the City of Los Angeles ULA transfer tax once a sale clears the inflation adjusted thresholds. It is added to the city 0.45% base transfer tax and is typically paid by the seller.
The surcharge applies to the full price.
Rates and thresholds
Effective July 1, 2025, the ULA rate is 4% on sales from $5.3 million to $10.6 million.
It is 5.5% on sales above $10.6 million, while transactions below the cutoffs owe 0% ULA.
Exemptions and scope
The measure covers condos, apartments, and commercial property within city limits, creating administration logistics at closing.
Key limits for exemption verification include:
- Nonprofit buyers are exempt.
- Limited equity housing cooperatives are exempt.
- 1031 exchanges receive no exemption.
Why ULA Tax Revenue Missed Projections
As the ULA surcharge took effect on April 1, 2023, early fiscal forecasts quickly collided with a slower high end sales market in Los Angeles. Rising mortgage rates near 8.1% further reduced affordability and weighed on overall sales activity.
Budget Shock and Forecasting Errors
Projection Gap
The 2023-24 adopted budget projected $604.6 million.
Year end estimates were $270.3 million, 55.3% below.
Early annual targets of $672 million to $1.1 billion assumed strong deal volume.
Studies found eligible transactions down 38% and odds above $5 million down 55%.
Collection Friction and Legal Risk
Administrative Delays
Collections totaled $156.9 million by January 2024.
Administrative delays in rulemaking and processing pushed receipts later, while 2024-25 projections stayed near $271.1 million.
Prop 13 related property tax offsets were estimated at 63% to 138% of ULA revenue.
Litigation and ballot measures added risk.
How the Mansion Tax Reshaped LA Real Estate Sales
Since the ULA surcharge took effect in April 2023, Los Angeles real estate sales above $5 million shifted abruptly.
The new levy is 4 percent from $5.3 million to $10.6 million, and 5.5 percent above $10.6 million.
Sales cliff
By mid 2023, deals in the $5 million to $6 million band fell near zero.
Agents reported luxury sellers delaying listings.
They also said the odds of clearing the threshold dropped about 50 percent.
Avoidance and flight
Non single family trades, including multifamily and commercial, declined 30 to 50 percent.
A renovation surge—up 46 percent in permits—signaled owners choosing upgrades over taxable exits.
- Pricing just below $5.3 million.
- Structuring consideration to limit the stated price.
- Buyer migration toward Las Vegas and nearby suburbs.
What ULA Revenue Means for Housing Supply and Affordability
The same sales cliff that gutted $5 million-plus transactions also reshaped what Measure ULA can fund and what Los Angeles can build.
Measure ULA has raised $1.03 billion, but annual revenue is $280 to $350 million, below forecasts.
Supply Disruption
Permits fell 40% after April 2023 as builders priced projects under $5 million and $10 million or moved luxury work outside city limits.
Luxury owners avoided selling, and renovation permits jumped 46%, reducing turnover and tightening supply.
Affordability Strain
Prop 13 can offset 63% to 138% of receipts, cutting net housing resources and costing schools and local governments $25 million yearly.
Fewer sales and starts keep inventory tight, pushing Rent Burden up and Eviction Risk high despite prevention spending in many higher cost neighborhoods.
Assessment
Los Angeles mansion tax receipts have remained below early projections, complicating budget planning tied to homelessness and affordable housing programs.
High value sales have shifted in timing, structure, and geography, reducing taxable volume and amplifying volatility in quarterly collections.
The weaker inflow limits the city’s ability to scale acquisition, construction, and tenant protections without offsetting funds.
Until transaction activity stabilizes and exemptions are clarified, ULA revenue will continue to function as an unstable funding source.
