LA's mansion tax explained: what the RAND study found and what agents should know

The short version

A new RAND Corporation study estimates that Measure ULA, the City of Los Angeles transfer tax often called the mansion tax, has cut production of large apartment buildings by about 30%, or roughly 9,100 units, since it took effect in April 2023. RAND also finds the tax has raised about $1.2 billion, less than half of the $2.7 billion its backers projected.

The study lands in the middle of a live fight. A City Council proposal to exempt newer buildings is in committee, the city's housing department has warned what exemptions would cost its programs, and ULA reform is part of the November mayoral race. Here is the background and what it means for agents.

What Measure ULA is

City of Los Angeles voters approved Measure ULA in November 2022. The campaign was led by the coalition United to House LA, and the tax has applied to sales since April 1, 2023.

How it works today, according to the LA Office of Finance:

• Two tiers. For sales closing after June 30, 2026, sales above $5.4 million and below $10.9 million pay 4%. Sales of $10.9 million or more pay 5.5%.
• On top of the base tax. Every sale in the city already pays a 0.45% base transfer tax. ULA is added to it, so the combined rates are 4.45% and 5.95%.
• Thresholds move every July. They started at $5 million and $10 million and are adjusted each year for inflation.
• City of LA only. The tax applies to property within the city limits. Sales in independent cities such as Pasadena or Burbank, and in unincorporated county areas, do not pay it.

Two details surprise many sellers. First, the tax applies to the full sale price, not only the amount above the threshold and not only the profit. The Howard Jarvis Taxpayers Association, which is challenging the measure in court, highlights this point. Second, despite the nickname, it covers every property type: homes, apartment buildings, offices, shops, warehouses and land.

Where the money goes. After 8% for administration, 70% of ULA revenue funds affordable housing construction, rehabilitation and preservation. The other 30% funds homelessness prevention, such as rental assistance and legal help for tenants facing eviction, according to the Los Angeles Housing Department (LAHD). From April 2023 through April 2026, the tax raised nearly $1.2 billion from 1,633 sales. LAHD expects to allocate more than $520 million in ULA funds in the 2026-27 fiscal year, which it calls the largest annual housing allocation the city has made.

What RAND found

The 89-page report is titled "The Effects of the Measure ULA (United to House LA) Transfer Tax on Economic Development and Municipal Finances in Los Angeles." Researchers studied sales records, parcel data, building permits and certificates of occupancy from 2020 through early 2026.

Key estimates, as reported by Realtor.com:

• Housing. Production of large multifamily buildings fell an average of 30%, about 9,100 units. RAND says the drop would have been bigger without Executive Directive 1, the city's fast track for 100% affordable projects, which streamlined approval for nearly 47,000 units.
• Jobs. About 16,650 full-time construction jobs.
• Public revenue. About $452 million in forgone revenue to city, county and state agencies over three years, including about $80 million for LAUSD.
• Sales. High-value transactions fell 31%.
• The next 10 years. If ULA stays as it is, RAND projects $1.68 billion in lost revenue, 31,000 fewer homes and 54,000 fewer construction jobs.

Why would a tax on sales slow building? Many developers plan to sell a building once it is finished, so a large tax at sale lowers what the project is worth to them. Victor Currie, an agent at Douglas Elliman in Los Angeles, told Realtor.com that an apartment builder choosing between the city of LA and nearby cities such as Burbank or Pasadena would favor the places that charge less transfer tax on the eventual sale. The RAND authors wrote that the tax "dampened commercial development including market rate housing production," which generates fees that fund city services and schools.

RAND also modeled a reform: exempt newer commercial and apartment buildings for 15 years and tax older ones at a lower rate. It estimates that version would raise $823 million more over a decade and produce nearly 19,000 homes, 2,000 of them affordable, plus more than 33,000 construction jobs.

These are model estimates. They compare what happened with what RAND expects would have happened without the tax, so they are not a count of cancelled projects.

The case for keeping ULA as it is

• The original backers. United to House LA, which led the 2022 campaign, opposes amending the tax. It argues changes would delay and reduce funding for affordable housing.
• The housing department's math. LAHD's May 2026 report found that the exemptions under discussion could cut ULA revenue by 13% to 35%, up to about $177 million a year. At the broadest level, LAHD estimates that would mean about 350 fewer new affordable homes, 1,500 fewer homes preserved, 950 fewer households receiving rental assistance and 2,100 fewer households getting full legal representation against eviction each year.

The politics: what happens next

• Council proposal. On January 28, 2026, councilmembers introduced a motion to send a ULA amendment to voters. It would exempt most properties other than single-family homes, duplexes and triplexes for 15 years after construction. It would also add a three-year hardship exemption after natural disasters, retroactive for fire-impacted homes since January 7, 2025. The motion cited the possibility of a statewide ballot measure to eliminate ULA. The Council did not place it on the June ballot and sent it to its Ad Hoc Committee on ULA, where it is pending.
• Mayor's race. Councilmember Nithya Raman, an early ULA supporter who introduced the reform proposal, is challenging Mayor Karen Bass in November. "The structure of ULA now disincentivizes investment in exactly the kind of buildings that we are saying are going to help us meet our housing shortage," Raman said in January. Bass's office has pointed to Executive Directive 1 and a large-scale zoning program as her housing record.
• Court challenge. The Howard Jarvis Taxpayers Association is challenging the measure in court.

What this means for LA agents

1. Price around the line. Because ULA applies to the full price, a sale at $5,400,000 owes no ULA, while a sale at $5,410,000 owes $216,400. At the $10.9 million line, the rate on the full price jumps from 4% to 5.5%. Run the seller's net at both prices before you set a list price.
2. Confirm the jurisdiction. Some homes with a Los Angeles mailing address sit in unincorporated county areas or separate cities that do not charge ULA. Check the parcel before you quote closing costs.
3. Mind the July reset. The thresholds change every July 1, so a listing near the line may face different math depending on when it closes.
4. Talk exit costs with multifamily clients. For investors buying or building apartments in the city, a 4% to 5.5% tax at sale belongs in the underwriting.
5. Do not promise reform. Exemptions for new buildings and fire-affected homes are proposals, not law. Watch the committee and the November election.