Double Taxation Trap in LA for Lenders
April 14, 2023

Measure ULA, also known as the "Mansion Tax", has been introduced to fund affordable housing projects and provide resources to tenants at risk of homelessness in Los Angeles. The ULA rates are shown in the table below:


Transfer Tax


Los Angeles City
  • 4% of the property value $5 million to $10 million (Measure ULA tax)
  • 5.5% of the property value over $10 million (Measure ULA tax)
  • Plus $1.10 per $1,000 Los Angeles County Tax
  • Plus $4.50 per $1,000 other city tax

Culver City
  • 0.45% of the property value up to $1.5 million
  • 1.5% of the property value $1.5 million to $3 million
  • 3% of the property value $3 million to $10 million
  • 4% of the property value over $10 million
  • Plus $1.10 per $1,000 Los Angeles County Tax

San Francisco City
  • 2.25% of the property value $5 million to $10 million
  • 5.5% of the property value $10 million to $25 million
  • 6% of the property value over $25 million

Santa Monica City
  • 5.6% of the property value over $8 million
  • Plus $1.10 per $1,000 Los Angeles County Tax
  • Plus $3.00 per $1,000 on amounts less than $5 million
  • Plus $6.00 per $1,000 on amounts $5 million or more

San Jose City
  • 0.75% of the property value between $2 million and $5 million
  • 1.0% for property valued greater than $5 million and less than $10 million
  • 1.5% for property valued over $10 million
  • Plus $0.55 per $500 Santa Clara County Tax
  • Plus $1.65 per $500 other city tax

Why do Lenders care? The City’s real property transfer tax is applicable on all documents that convey real property within the City. The real property transfer tax is an excise tax on the privilege of selling a real property interest, not a tax on the property itself, and is calculated on the consideration or value of the real property interest conveyed. This includes but is not limited to both the foreclosure sale and then, if applicable, the resale.

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In recent news, the Reuben brothers foreclosed on Michael Rosenfeld’s $2.5 billion Century Plaza development, after more than a year of litigation concerning the debt on the project. They had hoped to close a deal before the City of Los Angeles' new transfer taxes went into effect. However, they were unsuccessful and now the duo now faces a 5.5 percent tax on the foreclosure sale price since the city has not provided any tax exemption for foreclosures. They fought the tax and lost in the lower court. The Reuben brothers appealed the decision. Attorneys therefore remain unclear whether the tax will apply to foreclosures going forward.

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Should the Reuben brothers lose their appeal, this would mean that lenders will be required to have cash to pay the ULA tax pursuant to the tables after they foreclose and again as the seller during the disposition of the asset. This poorly written bill, if enforced as written, will tax lenders up to 11% (5.5% on the foreclosure purchase and another 5.5% on the resale to the market) for foreclosing on properties.

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Disclaimer: We caution our readers that we are not providing accounting or tax advice, and it is important to consult your accountants and tax attorneys to verify the information. While we do not doubt the accuracy of the information contained in this newsletter, we have not verified it and make no guarantee, warranty, or representation about it.

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