For the first time since Measure ULA took effect, Los Angeles leaders are considering meaningful revisions aimed at reducing its impact on housing development. The LA City Council is expected to vote on placing a measure before voters this November that would exempt many newly constructed multifamily properties from the city’s transfer tax, marking one of the most significant proposed changes to ULA since its adoption.
A Potential Shift in LA’s Transfer Tax Policy
Approved by voters in 2022, Measure ULA applies a 4% transfer tax on real estate transactions above $5.3 million and a 5.5% tax on sales exceeding $10.6 million. While commonly referred to as the “mansion tax,” the measure has generated most of its revenue from commercial real estate transactions, raising more than $1.2 billion to date.
Since its implementation, many investors, developers, and industry professionals have argued that the tax has discouraged investment, slowed transaction activity, and made new development projects more difficult to finance.
Proposed Exemption for New Housing Projects
The proposal before the City Council would ask voters to approve a temporary exemption from Measure ULA for qualifying residential developments.
If approved, newly constructed housing projects containing five or more units—including mixed-use developments with residential components—would not be subject to the transfer tax for the first 10 years after receiving a certificate of occupancy. The exemption would apply to both ground-up construction and eligible conversion projects, provided they receive permits after the new measure becomes effective.
For developers and long-term investors, this could significantly improve future project economics by reducing potential exit costs during the first decade of ownership.
Additional ULA Changes Under Consideration
Alongside the development exemption, the proposed ballot measure would make several administrative updates to Measure ULA, including adjustments to oversight committee qualifications and revisions to how program funding is distributed.
The City Council is also expected to consider a separate ballot proposal that would grant owners of residential properties damaged by the 2025 Palisades Fire a one-time, five-year exemption from the Measure ULA transfer tax.
State-Level Reform Efforts Continue
The City’s proposal follows the recent collapse of a statewide ballot initiative that could have dramatically altered the future of transfer taxes throughout California.
That initiative would have required a two-thirds voter approval threshold for local transfer taxes while applying the rule retroactively—effectively invalidating Measure ULA because it originally passed with less than 60% voter support. The proposal was ultimately withdrawn after negotiations with state lawmakers produced an alternative that raises the approval threshold only for future measures.
Meanwhile, Sacramento lawmakers continue to explore additional reforms. Assembly Bill 736, introduced by Assemblymember Buffy Wicks, would cap local transfer taxes at 1.5%, substantially below Measure ULA’s current rates.
What This Means for Multifamily Investors
Although Measure ULA remains in effect today, policymakers appear increasingly willing to revisit aspects of the tax in response to concerns from the real estate industry and the need to stimulate housing production.
If voters approve the proposed exemption this November, developers of qualifying multifamily projects could benefit from greater flexibility and improved investment returns, potentially making new construction in LA more financially attractive. At the same time, broader legislative discussions at both the local and state levels suggest that additional reforms to transfer taxes could continue over the coming year.
For investors evaluating acquisition, development, or disposition opportunities in Los Angeles, the outcome of these proposals could have meaningful implications for underwriting, project feasibility, and long-term investment strategy.
Whether you’re considering buying, selling, or developing multifamily property in LA, staying ahead of evolving regulations is essential. Taksa Investment Group closely monitors legislative changes affecting the market and can help you understand how these developments may impact your investment decisions.
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