New transfer taxes on property sales of $5 million and above will help fund affordable housing.
In the rarified air of luxury Los Angeles real estate, 30 days is a common closing timeline and two weeks would be speedy, explained Billy Rose, who’s guided buyers and sellers through high-end home purchases for years.
If those deals at The Agency had come together just a few days later, the $8.6 million sale would have had a $382,700 city transfer tax attached. The $14 million sale would have come with an $833,000 transfer tax, according a City of Los Angeles tax calculator. Earlier this month, Ari Afshar, founder of VOYAGE Real Estate team at Compass COMP , wrapped the all-cash closing on a $4.75 million house, representing the buyers. The sellers were moving to another pocket of L.A., he noted.
At the same time, many states have been rolling back rates for broad swaths of residents. Counting West Virginia’s recent deal to trim income taxes, there have been 22 states to cut individual income taxes since 2021, according to the Tax Foundation. The city’s tax has been dubbed the “mansion tax,” but that’s “a misleading description,” according to Lewis Horne at the commercial real estate brokerage giant CBRE CBRE . In fact, the focus on high-end residential real estate misses where Horne thinks the real impact will be.
Los Angeles County had a 9.7 million population in July 2022, down from 9.8 million one year earlier, according to the Census. Los Angeles County is the country’s most populous county, nearly double the population in second-place Cook County, Ill. The imminent tax is not the breaking point for companies deciding to do business in Los Angeles or California, but it heavies the burden, Horne said. “It’s the death of a thousand cuts.”
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