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Real Residential Or Commercial Property Transfer Tax and Measure ULA FAQ
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Tax Due
Effective for transactions closing after June 30, 2025, the new limits for ULA will be $5,300,000 and $10,600,000. Transactions above $5,300,000 however under $10,600,000 will be examined a 4% tax and transactions $10,600,000 and up will be evaluated a 5.5% tax.
- Link to United to House LA (ULA) Dashboard (Los Angeles Housing Department).
- Link to Source Data
How often is the City's real residential or commercial property transfer tax used?
The City's genuine residential or commercial property transfer tax applies on all files that communicate genuine residential or commercial property within the City, unlike residential or commercial property taxes which take place each year. The real residential or commercial property transfer tax is an excise tax on the opportunity of selling a genuine residential or commercial property interest, not a tax on the residential or commercial property itself, and is determined on the factor to consider or value of the genuine residential or commercial property interest conveyed.
Does the City impose a genuine residential or commercial property transfer tax besides the special tax enforced under Measure ULA?
Yes, the City enforces a real residential or commercial property transfer tax on all documents that communicate genuine residential or commercial property within the City. The present tax (" Base Tax") is calculated based upon the factor to consider or worth of the real residential or commercial property interest conveyed at a rate of 0.45%. The special tax under Measure ULA (" ULA Tax") enforces an additional tax on top of the Base Tax.
What is Measure ULA and how does it work?
Measure ULA established the ULA Tax to fund economical housing jobs and offer resources to occupants at danger of homelessness. The ULA Tax is imposed on all files that communicate real residential or commercial property within the City of Los Angeles when the consideration or worth of the real residential or commercial property interest conveyed surpasses a limit of five million dollars, or is 10 million dollars or greater, respectively.
What are the rate elements of the Base Tax and the ULA Tax under the City's real residential or commercial property transfer tax?
The rate elements are as follows:
- The Base Tax rate of $2.25 per $500 or part thereof (" Base Rate").
- The ULA Tax rates of, 1) 4% for residential or commercial properties conveyed over $5,150,000, however under $10,300,000 and 2) 5.5% for residential or commercial properties conveyed at $10,300,000 or more (" ULA Rates").
- The particular language for the brand-new rates can be found here: https://clkrep.lacity.org/onlinedocs/2022/22-1100-S2_ord_187692_1-1-23.pdf.
- The chart below is summary of the rates:.
- Note: the City's Base Rate is $2.25 for each $500 or fractional part thereof. A transfer in which the worth of the residential or commercial property communicated is not divisible by $500 will be rounded up to the nearest $500 for the computation of the Base Tax. This does not apply to the ULA Rate computations, which are percentage-based.
When did the ULA Tax go into result?
The ULA Tax applies to qualified conveyances of genuine residential or commercial property interests that happen on or after April 1, 2023.
How will the City use the April 1 reliable date of the ULA Tax?
The City's procedure for applying the ULA Tax is designed on the ownership modification guidelines under California Board of Equalization residential or commercial property tax rule 462.260 for all documents based on the City's genuine residential or commercial property transfer tax. If a modification of ownership happened before April 1 however is received by the county for taping on or after April 1, 2023, the taxpayer will require to offer evidence of the real transaction date to reveal that it in fact took place before the April 1, 2023 efficient date of the ULA Tax.
Will the value thresholds under the ULA Tax be adjusted yearly?
Consistent with the Measure ULA, the worth limits of when to use the ULA Tax and its corresponding rates are changed yearly based on the Bureau of Labor Statistics Chained Consumer Price Index.
How will the City's real residential or commercial property transfer tax be used to residential or commercial properties that are located partially within the borders of the City?
The real residential or commercial property transfer tax will be applied in percentage to the worth of the real residential or commercial property interest that was moved within the borders of the City. If a valuation of the real residential or commercial property interest isn't available, the real residential or commercial property transfer tax must be used based on the square footage of the residential or commercial property within the borders of the City, as a percentage of the overall consideration or value of the real residential or commercial property interest conveyed.
How will the City handle over payments or under payments of the genuine residential or commercial property transfer tax?
If the City, through its compliance procedure, determines a potential over payment or under payment, the City will alert the celebrations to the deal of the possible overpayment or underpayment. In cases of overpayment, taxpayers will need to file an ask for refund from the Office of Finance. The Claim for Refund Application can be discovered here:
https://finance.lacity.gov/sites/g/files/wph1721/files/2021-04/refundclaim%20%281%29.pdf
In case of underpayment, the taxpayer will get a billing for the overdue balance.
Are there any exemptions for the ULA Tax?
Yes, Measure ULA does provide exemptions for the ULA Tax. The ULA Tax will be not be appropriate on documents that convey real residential or commercial property within the City of Los Angeles if the transferee is described under recently added sections 21.9.14 and 21.9.15 of the Los Angeles Municipal Code (" LAMC"). The transferee descriptions are as follows:
Qualified Affordable Housing Organizations under LAMC Section 21.9.14
- A non-profit entity within Internal Revenue Code section 501( c)( 3) with a history of economical housing advancement and/or economical housing residential or commercial property management experience.
- A Neighborhood Land Trust, or Limited-Equity Housing Cooperative that has a history of affordable housing advancement and/or economical housing residential or commercial property management experience.
- A minimal partnership or restricted liability business in which an acknowledged 501( c)( 3) nonprofit corporation, community land trust, or limited-equity housing cooperative is a basic partner or managing member and such 501( c)( 3) not-for-profit corporation, community land trust, or limited-equity housing cooperative has a history of affordable housing advancement and/or budget-friendly housing residential or commercial property management experience, or such minimal partnership or restricted liability company includes a partner or member, respectively, that has a history of budget friendly housing development and/or affordable housing residential or commercial property management experience.
- A neighborhood land trust or limited-equity housing cooperative partnering with an experienced non-profit company.
- A community land trust or limited-equity housing cooperative that does not demonstrate a history of economical housing advancement and/ or budget-friendly housing residential or commercial property management experience which tape-records an affordability covenant, constant with section 22.618.3( d)( 1 )( i). b. of the Los Angeles Administrative Code, on the residential or commercial property at the time of the acquisition.
The Los Angeles Housing Department administers ask for ULA tax exemptions under LAMC Section 21.9.14.
Other Exemptions under LAMC Section 21.9.15
- An acknowledged 501( c)( 3) entity which got its preliminary IRS decision letter classification letter at least 10 years prior to the transaction and has possessions of less than $1 billion.
- The United States or any company or instrumentality thereof, any state or area, or political subdivision thereof, or any other federal, state or regional public agency or public entity.
- Any entity or agency exempt from the City's taxation power under the California or U.S. Constitutions.
- All other transactions which are exempt from the base Real Residential or commercial property Transfer Tax per regional, state, or federal laws and regulations.
The Office of Finance administers ask for ULA tax exemptions under LAMC Section 21.9.15. To request a determination of an from the ULA under 21.9.15( a), please send the following files and details to finance.ula@lacity.org.
- Power of Attorney.
- Legal name.
- Mailing address.
- IRS 501 (c)( 3) decision letter showing the reliable date of the exemption status.
- Newest Form 990 or newest audited financial statements.
Once the proper paperwork has actually been provided and a determination of exemption has been made, the Office of Finance will offer a letter accrediting that transactions where the entity is the buyer/transferee are exempt from the tax. The letter is excellent for one year from the date of the letter.
If a transaction has actually currently occurred and the tax was paid, however the buyer consequently thinks it certifies for an exemption, they will need to file a refund claim using the form kept in mind above.
Is the very same step used to figure out the Base Tax and the ULA Tax?
For the Base Tax, it is calculated based on net worth of the residential or commercial property communicated (unique of the worth of any lien or encumbrance staying thereon at the time of sale.) For the ULA Tax, it is determined based upon gross worth (consisting of the worth of any lien or encumbrance staying thereon at the time of sale.)
If the buyer is assuming the seller's loan, is the assumed loan amount left out from the value of the residential or commercial property conveyed?
For the Base Tax, it is computed based on net worth (unique of the presumed loan amount.) For the ULA Tax, it is calculated based on gross worth (consisting of the presumed loan amount.)
If you have any concerns relating to the ULA Tax, please contact finance.ula@lacity.org or (213) 635-7277.
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