By taxing all real estate transactions above $5 million, Los Angeles is only making its current housing crisis worse.
, tried to address this problem by passing a “mansion tax” that would fund “affordable housing” projects. But like everything else Democrats do in California, the plan backfired, causing residential building construction to plummet, thus raising housing prices even further.
Sold to voters as a tax on “mansions,” what the measure really does is impose an extra 4% levy on almost all properties sold between $5 million and $10 million and a 5.5% tax at properties sold for $10 million. These include not just large homes in Bel Air, but also gas stations, commercial real estate, condominiums, and apartment complexes.the $5 million threshold means the new ULA tax will hit just about any apartment complex with over 15 housing units.
Around the state as a whole, multifamily housing has trended above the national average. Whereas new multifamily housing permit authorization fell nationally by nearly 19% from 2022 to 2023, California’s only decreased by 5%. But in Los Angeles County, authorizations dropped by 19%, and in LA city, they slumped by a staggering 24%. The mansion tax appears to be to blame.just $215 million, less than half the $672 million in revenue the ULA’s proponents projected.
The real protection Angeleno tenants need is from a Democratic Party that is constantly passing new regulations and higher taxes that make new home and apartment construction more expensive. Until Los Angeles voters start electing leaders whose motto is “Build baby build,” they can only expect their existing housing crisis to get worse.
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