Los Angeles’ super-rich have been pulling out all the stops to offload their multimillion-dollar properties to avoid a new tax that comes into effect on April 1, according to some of the city’s top real estate agents.
The “mansion tax”, as it has come to be known, puts a transfer tax of 4 percent on the sale of properties with a value of USD 5 mln or over, and a 5.5 percent tax on properties worth USD 10 mln or more, in the city of Los Angeles.
The new fee, which was designed to provide funds for affordable housing programs, does not apply in other cities in Los Angeles County.
According to Jason Oppenheim, founder and president of the Oppenheim Group, and star of the Netflix reality series, “Selling Sunset,” the tax is bad for business.
“The markets are having a very difficult time, real estate is having a very difficult time because of inflation and because of high interest rates. It’s just the worst possible timing. It’s really, really devastating for the community,” Oppenheim told Reuters on Wednesday.
Oppenheim questioned whether a home valued at USD 5 mln can be classified as a mansion in one of the priciest real estate markets in the United States.
Across town in Beverly Hills, some sellers have been offering cars and million dollar commissions as an incentive to sell properties as soon as possible.
The “mansion tax” takes effect on April 1 and comes into law after Los Angeles voters passed Proposition ULA on November 8, 2022, by a margin of 58 percent to 42 percent.
The measure was approved in order to provide funding for the city’s homelessness crisis.