Updated July 2026 | By Eric Engelbert
What Is Measure ULA and How Did It Start?
Measure ULA, popularly called the "mansion tax," took effect in Los Angeles on April 1, 2023. Passed by voters in November 2022 with 57% approval, the measure imposes a transfer tax on high-value real estate sales within the City of Los Angeles. The revenue goes toward homelessness relief and affordable housing programs. When it launched, it applied a 4% tax on sales above $5 million and 5.5% on sales above $10 million.
The immediate market response was sharp. Celebrities and affluent property owners, including Jim Carrey, Britney Spears, Kylie Jenner, and Mark Wahlberg, rushed to list and close sales before the tax took effect. Jim Carrey had listed his Los Angeles home at $28.9 million in early 2023 and cut the price multiple times to avoid the tax impact. Agents described a "frenzy" of activity in the weeks before April 1, 2023, as sellers scrambled to close before the new tax applied. In the months following, luxury sales in Los Angeles slowed noticeably as the market adjusted to the new cost structure.
The Current Tax Rates: Thresholds Have Increased
Measure ULA includes an inflation indexing provision that adjusts the tax thresholds annually. The original $5 million and $10 million thresholds have moved upward each year since the tax took effect.
For transactions closing between July 1, 2025 and June 30, 2026, the thresholds were $5.3 million and $10.6 million. For transactions closing on or after July 1, 2026, the updated thresholds are $5.4 million and $10.9 million.
The tax rates themselves have not changed: 4% applies to sales between the lower and upper thresholds, and 5.5% applies to sales at or above the upper threshold. On a $10.9 million sale, that is a $599,500 tax bill due at closing. On a $20 million sale, the tax is $1.1 million.
The city has collected over $1 billion in total revenue under Measure ULA since it took effect, crossing that milestone in early 2026. Supporters of the measure point to that figure as evidence the tax is funding the housing and homelessness programs it was designed to support.
What the Data Shows About Market Impact
The research on Measure ULA's impact is significant, and it cuts in two directions.
On the luxury residential side, a UCLA study estimated that the odds of a property selling above the $5 million threshold fell by as much as 55% after the tax took effect. High-value sales slowed, prices were adjusted to account for the tax cost, and some sellers chose to delay or cancel listings rather than absorb the hit. This is consistent with what happened in the months following April 2023 and what has continued at a lower level since.
On the housing production side, the same UCLA research found that the tax was reducing apartment development in the City of Los Angeles by at least 1,910 units per year, representing an 18% decline from the two years before ULA took effect. The mechanism is straightforward: when a developer buys land or an existing building to redevelop into apartments, the seller of that property owes the ULA tax if the sale price exceeds the threshold. That tax cost gets priced into the land transaction, either reducing the price the seller accepts or increasing the cost the developer must absorb. Either way, the economics of new housing development in Los Angeles get harder. For a tax specifically designed to address the housing crisis, reducing housing production is a serious unintended consequence.
The Push to Exempt Multifamily Properties and Why It Failed
As the data on housing production losses accumulated, a coalition of developers, housing advocates, and City Council members pushed for a ballot measure that would exempt new multifamily construction from the ULA tax. The argument was direct: if the tax is supposed to fund affordable housing but is simultaneously killing the construction of new market-rate and affordable apartments, the policy is working against itself.
The case for exempting multifamily properties rests on a few specific points. Apartment buildings, land being assembled for residential development, and mixed-use projects over the tax threshold all trigger ULA at closing. A developer buying a $6 million site to build 40 apartments pays $240,000 in ULA tax on top of every other cost of acquisition. A developer selling a completed apartment building to a long-term investor also triggers the tax on the selling side. Both transactions are part of the normal pipeline for creating housing, and both are now taxed in ways that make the numbers harder to justify.
Supporters of the exemption argued that exempting new construction multifamily transactions would protect housing production without meaningfully reducing the tax's revenue, since most of the revenue comes from high-value single-family and commercial sales, not apartment construction deals.
On July 6, 2026, the Los Angeles City Council voted to kill the multifamily exemption ballot measure, declining to send it to voters. The Council instead directed city staff to draft a pilot tax credit program that would reduce the effective ULA rate for certain qualifying multifamily and mixed-use projects. As of mid-2026, that pilot program has not been finalized or implemented. The exemption that the development community was seeking did not happen, and the tax applies in full to multifamily transactions above the thresholds.
The Repeal Effort and What Proposition 43 Means
The Howard Jarvis Taxpayers Association pursued a statewide ballot initiative that would have capped transfer taxes in charter cities, required a two-thirds vote to pass future citizen-sponsored special taxes, and potentially invalidated Measure ULA and similar measures across California. The initiative qualified for the November 2026 ballot after gathering sufficient signatures.
However, in late June 2026, the Howard Jarvis Taxpayers Association withdrew the original initiative from the ballot after reaching a deal with Governor Gavin Newsom and legislative leaders in Sacramento. The state passed substitute legislation creating Proposition 43, which will appear on the November 2026 ballot instead.
Proposition 43 would require future local special taxes proposed through the citizen initiative process to receive approval from two-thirds of voters, up from the simple majority that allowed Measure ULA to pass in 2022. Critically, Proposition 43 is prospective only. It would not repeal Measure ULA or any existing tax. It applies only to new taxes proposed after it takes effect in 2027.
What this means practically: Measure ULA is not going away through the November ballot. A full repeal of ULA would require either a new Los Angeles ballot measure, a court ruling, or the City Council acting to modify or rescind it. None of those appear likely in the near term. The debate has shifted from "will ULA be repealed" to "how might it be modified at the margins," with the pilot tax credit program the most concrete avenue currently under discussion.
What This Means for Orange County
Measure ULA applies only within the City of Los Angeles. Properties in Orange County, including Newport Beach, Laguna Beach, Laguna Niguel, Coto de Caza, and other high-value markets, are not subject to ULA. That geographic distinction has continued to drive some buyer interest toward Orange County from Los Angeles.
Since ULA took effect, we have seen steady interest from buyers who are either relocating from Los Angeles or who are comparing the total cost of ownership in both markets. On a $15 million property, the ULA tax alone adds $825,000 to the cost of selling in Los Angeles. A comparable property in Newport Beach or Laguna Beach has no equivalent tax. For buyers focused on long-term value and lower carrying costs, Orange County's position outside the ULA jurisdiction is a real differentiator.
Orange County Luxury Properties For Sale and compare Los Angeles luxury listings to see how the two markets compare side by side.
Buying or Selling a Luxury Property in Orange County?
The mansion tax debate in Los Angeles is a reminder that tax policy directly shapes where and when high-net-worth buyers and sellers act. Orange County remains outside the ULA zone, and our team tracks how policy changes in Los Angeles continue to influence buyer decisions across the region. If you are evaluating a luxury purchase or sale in Orange County, we can help you understand the full picture.
