California Lawmakers Propose Overhaul of L.A.’s Mansion Tax

Lawmakers in Sacramento look to make changes to the 2022 bill

State lawmakers proposed a new bill to overhaul measure ULA or L.A. ‘s ‘mansion tax’ on Tuesday. 

The new bill, SB-423, aims to take out parts of ULA that critics have said do more harm than good to the current housing market. By reducing the taxes imposed by Measure ULA for people looking to sell commercial buildings constructed in the last 15 years, think apartment buildings, offices, and shopping centers. 

Measure ULA was originally intended to raise taxes on high-value properties and funnel that money into affordable housing projects and programs to alleviate homelessness. The measure was passed by city voters in 2022, and since April 2023, the city has levied a tax on sales of properties worth $5 million or more. 

The ‘Mansion tax’ did not only apply to celebrity single-family houses in the hills, but also commercial buildings, including apartment complexes. While backers say that it is working as intended, those who oppose the tax say that it is having a much larger impact on slowing the development of new housing. This leads to making affordability worse in an already tight housing market. 

With the higher increase of taxes on higher-value property, it can scare away developers, leaving L.A. with less housing than it started with. 

Mott Smith, adjunct professor of real estate development at the USC Price School told LAist, “The units that we need to support all the households coming into the city — or that have to move and deal with their lives — those aren’t happening,” he said. “And when we squeeze the housing supply, the poor feel it the most.”