The California Measure ULA repeal — formally the Local Taxpayer Protection Act qualified for the November 2026 ballot — caps every municipal real estate transfer tax in California at 0.05% of gross sale price. That’s five-hundredths of one percent, or one-twentieth of one percent if you prefer the older fraction phrasing. On a $10 million sale, the maximum the city can collect is $5,000. On a $20 million sale, it’s $10,000. The cap applies to every charter city, general law city, and county in California, with no exceptions for cities that have already enacted higher rates and no grandfathering of existing surcharge structures.

To grasp the magnitude of the change, compare it to LA’s Measure ULA today. Under current law, a sale between $5.3M and $10.61M triggers a 4% surcharge. A sale of $10.61M or more triggers 5.5%. The California Measure ULA repeal would cut the LA City take on that $10.61M sale from $583,550 to $5,305 — a reduction of more than 99%. On a $20M sale, the city’s haircut drops from $1.1M to $10,000. These aren’t marginal savings; they’re the difference between a deal that pencils and a deal that doesn’t.

The California Measure ULA repeal also reaches well past LA. San Francisco’s transfer tax — which runs from 0.5% on sales below $250K up to 6% on sales above $25M — would be capped at the same 0.05%. SF’s top rate of 6% on a $30M downtown office tower currently generates $1.8M for the city. Under the repeal, that same sale would generate $15,000. SF has been the second-most-affected jurisdiction by ULA-style surcharges, and the repeal would functionally end the SF transfer-tax regime as a meaningful revenue source.

Berkeley’s transfer tax, which runs at 1.5% on sales above $1.5M with various carve-outs, would similarly fall to 0.05%. Culver City’s progressive transfer tax (which mirrors LA’s structure with rates of 1.5%, 3%, and 4% at different price thresholds) would be capped at 0.05%. Santa Monica, Oakland, and Richmond all have transfer-tax structures that would be gutted by the California Measure ULA repeal. The initiative is structured as a constitutional amendment to Article XIII of the California Constitution, which is what gives it the power to override existing municipal ordinances. A statutory initiative wouldn’t have that reach; the Howard Jarvis drafters chose the constitutional route specifically to make the cap unassailable by future legislative action.

The interaction with the documentary transfer tax matters and is widely misunderstood. California has a state-level documentary transfer tax under R&TC §11911 of $0.55 per $500 of value (or about 0.11% of sale price). Counties may impose this tax, and most do. Cities may impose an additional documentary transfer tax up to a matched 0.55 per $500. That documentary transfer tax is separate from the surcharges that the California Measure ULA repeal targets. The ballot measure’s plain language caps “any tax on the transfer of real property” at 0.05% — which would seem to also cap the documentary transfer tax. There’s a strong argument the drafters intended only to cap the supplemental surcharges (Measure ULA, SF’s Prop I, etc.) and leave the underlying documentary transfer tax untouched. The legal interpretation will be litigated. Until a court rules, escrow officers will likely collect the documentary transfer tax as before and treat the surcharges as the only taxes capped at 0.05%.

One nuance worth flagging: the California Measure ULA repeal language as drafted does not specifically name Measure ULA. It targets all municipal real estate transfer taxes above 0.05%. That’s deliberate. The Howard Jarvis drafters wanted a measure that couldn’t be circumvented by repealing ULA and re-passing it under a different name. The structural cap means a future LA City Council can’t simply rename ULA “Measure ULA-2” and re-impose 4% rates without first overcoming the 0.05% constitutional ceiling — which would itself require a statewide vote.

For NYC clients planning around the California Measure ULA repeal, the practical takeaway is this: if the measure passes, every California city’s transfer-tax surcharge collapses to 0.05%. There’s no patchwork analysis to run, no special LA carve-out, no SF exception. One number, one cap, applied uniformly. That’s structurally simpler than the current regime, where sellers have to track multiple cities’ progressive rates, threshold indexing, and exemption frameworks. From a planning standpoint, the California Measure ULA repeal would substantially simplify CA real-estate disposition tax modeling, even as it dramatically reduces the revenue side. Whether that simplification is good or bad policy is a political question; whether it changes the disposition math for every NYC client with CA exposure is not — it absolutely does, and the magnitude is large enough that it should drive timing decisions for the next six months.

It’s also worth grasping what the 0.05% number means in the context of historical California municipal taxing patterns. Before Measure ULA’s 2022 passage, LA’s combined city-and-county documentary transfer tax was roughly 0.56% — already higher than most US municipalities, but in the same order of magnitude. Measure ULA pushed effective rates on $10M+ sales above 6% all-in, which is roughly twelve times the pre-2022 baseline. The California Measure ULA repeal doesn’t just roll back to the pre-2022 baseline; it pushes the cap to a fraction of even that earlier number. Cities that hadn’t enacted ULA-style surcharges (Long Beach, Glendale, Burbank) still operate under the old documentary-transfer-tax framework, and the California Measure ULA repeal would barely affect them — their existing rates already sit near or below the 0.05% cap. So the differential impact is borne almost entirely by the handful of cities that adopted post-2018 progressive surcharge structures.

One additional consideration for clients in transition. If you’re holding LA property in a trust, partnership, or LLC and contemplating ownership-structure changes (gifting interests, redemptions, bringing in new partners), the California Measure ULA repeal materially changes the cost-benefit of those moves. Several change-of-ownership transactions trigger ULA today under the City’s broad change-of-control rules. Post-repeal, those same transactions would face the 0.05% cap. Wait-or-act decisions on trust funding, partnership restructuring, and family limited partnership transfers should now be re-modeled with both ULA outcomes in mind. This is true even if you have no current intention to sell the underlying property — the California Measure ULA repeal reshapes the carrying-cost analysis for every ownership-change scenario.

California ballot initiatives that pass at the November general election typically take effect on the day after the Secretary of State certifies the results — historically about five weeks after election day, so roughly December 9, 2026 if the November 3 vote goes YES. But the California Measure ULA repeal text itself can specify a different effective date, and the published initiative does include language that triggers the 0.05% cap “upon certification of the vote.” That means the effective date is approximately December 9, 2026, not November 4.

The five-week gap between vote and effective date matters enormously for in-flight closings. If a deal goes into escrow on October 25 and closes on November 12, what rate applies? Almost certainly the current ULA rates, because the close-of-escrow date controls and that date is before the certified effective date. If the same deal closes December 15, the California Measure ULA repeal applies and the seller pays 0.05%. The five-week window between November 4 and December 9 will see frantic re-trading of escrow timelines. Sellers will want to push closings into December; buyers may not care or may even prefer the earlier closing because the seller bears ULA on the standard CAR contract.

Retroactivity is not in the cards. The California Measure ULA repeal language doesn’t purport to refund previously paid ULA amounts, and the California Constitution generally prohibits retroactive tax refund mandates absent very specific drafting. Anyone who closed an LA sale on April 5, 2023 and paid $1M in ULA isn’t getting that money back regardless of the November vote. The political math wouldn’t support refund-style language even if drafters had been willing to attempt it; the City of LA has already spent or committed most of the $1B+ collected since April 2023. The California Measure ULA repeal simply caps future transfer-tax collection.

Litigation will define the actual stop-collection date, however. Within hours of certification, the City of LA — possibly joined by SF and Berkeley — will file in LA County Superior Court for a declaratory judgment that the initiative is unconstitutional or preempted. The City’s strongest theory is that Article XIII C, which governs voter approval of local taxes, occupies the field and bars a statewide constitutional amendment from limiting local tax rates set by local voters. There’s a meaningful argument here, though most academics rate it as unlikely to prevail given how broadly the California Constitution can be amended via initiative. Still, the City will seek a preliminary injunction. If a Superior Court grants one (unlikely but not impossible), ULA collection continues at current rates pending appeal. The Court of Appeal and ultimately the California Supreme Court would resolve it, probably by mid-2027.

The more likely pre-litigation path: opponents seek and obtain an injunction enjoining further collection at rates above 0.05%. That ruling would force the LA Office of Finance to either accept the 0.05% cap immediately or hold collected amounts in escrow pending appellate resolution. Escrow companies in LA County are already discussing collection-holdback protocols for deals that close in the December 2026 to mid-2027 window. Standard practice will likely be: collect ULA at current rates, hold in escrow, release to City or refund to seller depending on litigation outcome.

The “in-flight closings” question — what happens to a deal that goes into escrow before the vote but closes after? — has a clean answer in the standard CAR contract. The transfer-tax obligation accrues at close of escrow. If close happens after the California Measure ULA repeal effective date, the new 0.05% cap controls. Sellers on deals scheduled to close in late October or early November will have a strong incentive to delay the close into December if the polls suggest a YES win. Buyers may push back if they’re under pressure to take possession (rate-locks, occupancy plans, lease deadlines). We expect a wave of escrow extensions in October-November 2026, and several listing agents have told us they’re already advising sellers to draft repeal-contingent extension language into purchase agreements being negotiated today.

For sellers wondering whether the California Measure ULA repeal — if it passes — could be reversed by a later vote or legislative action, the answer is essentially no. As a constitutional amendment, the 0.05% cap can only be undone by another statewide vote. The California Legislature can’t override it. A future ULA-2 measure passed by LA City voters wouldn’t survive constitutional challenge as long as it imposed rates above 0.05%. The structural permanence of the California Measure ULA repeal is part of what makes it so significant: this isn’t a four-year political swing that might revert in 2030. It’s a fundamental restructuring of California municipal taxing authority that would need a counter-amendment to undo. For planning purposes, treat a passing California Measure ULA repeal as a permanent change to the LA transfer-tax regime, not a temporary one.

One final timing nuance worth knowing: even if the California Measure ULA repeal passes and takes effect on December 9, 2026, the LA Office of Finance will need administrative time to update collection systems, issue revised guidance, and retrain escrow officers on the new rate structure. We’d expect a rough patch in January and February 2027 where some escrow officers default to old rates by mistake and others over-correct. Verify your closing statement carefully if you close in that window.

For deals already in escrow at the time of the vote, the California Measure ULA repeal effective date question intersects with an additional question we get often: does the close-of-escrow date control, or does the document-recording date? Under California law, the transfer-tax obligation typically attaches when the deed is recorded with the county, which usually happens within 24-48 hours of close. For a deal closing November 30 with recording December 2, current ULA rates apply (because both events fall before the December 9 effective date). For a deal closing December 7 with recording December 11, the close happens pre-effective and the recording happens post-effective — and the answer to which rate controls depends on how the City reads its own ordinance. Conservative practice: assume the earlier of the two events (close-of-escrow) controls, but reserve the refund-claim position in writing through the closing-statement language and any holdback documentation.

If you’re planning a deal in the November-to-December 2026 window, our recommendation is to instruct escrow to record on or after December 9 if possible. The California Measure ULA repeal, if it passes, gives you a meaningful argument that the recording date is the controlling event — and even if that argument loses, you’ve preserved it for refund purposes without losing anything else. If the repeal fails, the recording date becomes irrelevant and you simply pay current rates. There’s no downside to the timing nudge, only upside if the political math goes your way.

The honest answer: it depends on three variables — your read of the polling, your need for liquidity, and your tax basis. Each one moves the answer independently, and the California Measure ULA repeal vote is the binary event that determines which path was right.

Start with the simple math. Suppose you own a $10M LA home with $4M of basis. Selling pre-vote, you pay 4% ULA on the $10M ($400,000), CA non-resident capital gains tax on the $6M gain (roughly 13.3% top rate, $798,000), federal long-term capital gains at 20% plus 3.8% NIIT ($1,428,000), and depreciation recapture if applicable. Net to you, before NY resident credit reconciliation: approximately $7.37M. Selling post-vote (assuming the California Measure ULA repeal passes), you pay 0.05% ULA ($5,000) and the same federal and CA gain taxes. Net: approximately $7.77M. The California Measure ULA repeal is worth $395,000 to you on this single transaction.

That $395,000 is the political-risk dollar amount. If you assign a 70% probability to the California Measure ULA repeal passing (consistent with the most recent polling showing the YES side at ~57-60%), the expected value of waiting is 0.7 × $395,000 = $276,500 — minus the cost of carrying the property for six months, minus the risk that the LA market softens further. If your monthly carry on a $10M home is $50,000 (property tax, insurance, maintenance, opportunity cost on tied-up equity), you’re spending $300,000 over six months to capture $276,500 of expected California Measure ULA repeal value. That’s roughly breakeven, which means the decision turns on factors other than the repeal alone.

The pricing premium on listings going to market in 2026 H2 is real. Listing agents are quoting two prices to motivated sellers: a “today” price that prices in current ULA risk, and an “if California Measure ULA repeal passes” price that’s about 3-5% higher because the buyer doesn’t have to fund the surcharge. Buyers are pricing the repeal optionality into their offers. We’ve seen offer letters with explicit ULA-contingent price adjustments — “$10.5M if closing before November 3, 2026; $10.85M if closing after California Measure ULA repeal effective date.” Brokers report this language now appears in roughly 20% of high-end LA offers.

The wait-or-sell calculus also has to account for the financing-cost dimension. Mortgage rates as of May 2026 are roughly 6.4% on jumbo. If the buyer’s financing penciled at $10M with seller carryback, but doesn’t pencil at $10.5M without ULA, your post-repeal pricing power may be illusory. A premium price requires a buyer who can fund it. The high-end LA buyer pool is thinner than it was in 2021-22, and several segments (foreign buyers, tech executives) have softened materially. A California Measure ULA repeal-driven price bump assumes a deeper buyer pool than may actually exist.

Structuring options to consider while you decide:

1031 exchange. Defer the gain entirely by reinvesting in like-kind real property. The 45-day identification rule and 180-day close rule are binding. A 1031 sidesteps the federal and CA gain question but still triggers ULA at the close of the relinquished property — unless the relinquished close happens after the California Measure ULA repeal effective date, in which case the 0.05% cap applies.

Delaware Statutory Trust (DST). A 1031 replacement vehicle that gives you a fractional interest in institutional-grade real estate without active management. Useful if you want out of LA management but want to keep the gain deferred. Same ULA timing analysis as a direct 1031.

Charitable Remainder Trust (CRT). If you have philanthropic intent and significant appreciation, contributing the property to a CRT before sale lets the trust sell ULA-free (no ULA exemption strictly, but the CRT pays it from trust assets and the trust is tax-exempt on the gain), pays you an income stream for life or term, and produces a current charitable deduction. Powerful for clients with both tax exposure and giving plans.

Installment sale under §453. Spread the gain recognition over the payment years. Doesn’t avoid ULA — that’s paid at closing — but smooths the federal gain. Subject to §453A interest if the receivable balance exceeds $5M.

Partial sale below threshold. If you can subdivide and sell two parcels each below the $5.3M threshold, ULA is zero on each. Aggregation rules apply if the conveyances are related, so this works only for genuinely separable assets sold to unrelated buyers.

Our default recommendation for clients with strong basis (relatively low gain) and no urgent liquidity need: list now, accept ULA at current rates, capture the spring/summer market. The California Measure ULA repeal expected value isn’t enough to justify a six-month carry on a low-gain asset.

For clients with weak basis (large gain) and flexibility on timing: hold through November 2026, list December 2026 to lock in California Measure ULA repeal pricing if it passes. If it fails, you’ve lost six months and pivot to a 1031 or installment-sale structure that defers the federal gain regardless of ULA.

For clients with imminent liquidity needs: sell now. Don’t bet your liquidity on a ballot outcome. The California Measure ULA repeal might pass, but it might not, and if you need the cash by Q1 2027 you can’t afford a litigation-induced delay.

One scenario we’ve worked through repeatedly: clients with multiple LA properties who could sell one now and hold the other through the vote. This barbell approach hedges the California Measure ULA repeal outcome. Sell the property with stronger basis (lower gain, less ULA savings exposure) now to access current market liquidity. Hold the property with weaker basis (larger gain, larger California Measure ULA repeal benefit if it passes) through November. If the repeal passes, the held property captures the larger savings; if it fails, you’ve at least monetized the lower-basis asset. This works only if you genuinely have flexibility on both timelines, but for clients with portfolio-level CA exposure, it’s the most rigorous answer to the wait-or-sell question.

One last factor in the calculus: insurance and natural-disaster risk. LA has had two major fire events in the past five years and ongoing wildfire risk affects insurance availability and premiums on certain properties. If your insurance is renewing in late 2026 and you’re not certain you can replace coverage, the California Measure ULA repeal upside has to be weighed against the risk of losing insurability before you sell. We’ve had clients accept the ULA cost rather than risk a six-month carry on an under-insured asset. The political-risk dollar number isn’t the only number that matters.

This question gets the second-most-frequent wrong answer in our intake conversations, so let’s be precise. ULA paid at closing today is not a federal income tax deduction. It’s not a state-and-local tax under §164. It doesn’t go on Schedule A. It’s a transfer tax tied to the disposition itself, which means it gets treated either as a selling expense reducing amount realized under §1001(b) or, in some narrow cases, as an addition to basis. The California Measure ULA repeal — if it passes — changes the magnitude of that selling expense from 4% or 5.5% to 0.05%, but it doesn’t change the categorization.

Selling expense treatment is the standard approach. If you sell a $10M property and pay $400,000 in ULA, your amount realized is $9.6M, not $10M. The capital gain calculation runs from $9.6M minus adjusted basis. If your adjusted basis is $4M, your gain is $5.6M, not $6M. The ULA “saves” you tax indirectly by reducing the gain on which you pay federal and CA tax. At a combined federal/CA marginal rate of about 37% (20% federal + 3.8% NIIT + 13.3% CA), that $400,000 selling expense saves you about $148,000 in income tax. Net cost of the ULA: approximately $252,000, not $400,000.

This selling-expense treatment matters when you compare pre-repeal vs post-repeal economics. The California Measure ULA repeal headline savings is $395,000 on a $10M sale. The after-tax savings is closer to $250,000 because pre-repeal ULA was already reducing your taxable gain. Most planning conversations skip this nuance, which makes the California Measure ULA repeal look more valuable than it actually is on an after-tax basis. It’s still a meaningful number; just not the headline number.

Federal vs NY basis differences are mostly cosmetic in this context. NY conforms to federal basis under Tax Law §612, and the same selling-expense treatment applies for NY purposes. NYC residents selling LA property report the gain on IT-201 (with an NY allocation if applicable, though typically the entire gain flows to NY as resident-source income) and claim a credit on IT-112-R for taxes paid to California on the same gain. The California Measure ULA repeal doesn’t change any of this; it just changes the size of the selling expense. The IT-112-R credit still flows.

The §1031 like-kind exchange interaction is more complex. In a §1031, you defer the entire gain by reinvesting in like-kind replacement property. ULA paid at the closing of the relinquished property is treated as boot if it’s paid from exchange proceeds, which would partially blow the deferral. Best practice: pay the ULA from non-exchange funds (a separate cash deposit at escrow) so the full sale price flows into the qualified intermediary’s hands. The California Measure ULA repeal would simplify this dramatically — at 0.05% the boot exposure becomes trivial, whereas at 4-5.5% it’s a real planning point. If you’re in a 1031 and the California Measure ULA repeal passes, you’d want to time your relinquished close after the effective date if possible, both for the cash savings and the 1031 cleanliness.

Depreciation recapture timing under §1250 doesn’t shift because of ULA. Recapture is calculated on the gain, and ULA reduces the gain (via reduced amount realized), so a higher ULA payment marginally reduces §1250 recapture. The California Measure ULA repeal would slightly increase recapture exposure because the 0.05% rate produces less of a gain-reducing selling expense. On a property with $1M of accumulated depreciation, the §1250 unrecaptured gain is taxed at 25% federally regardless of recapture rate elsewhere. The dollar swing is small but real — roughly $25 per $1,000 of changed amount realized.

NIIT under §1411 hits at 3.8% on net investment income, which includes capital gains from real-estate dispositions held passively. ULA reduces NIIT exposure indirectly via reduced amount realized. The California Measure ULA repeal would slightly increase NIIT exposure for the same reason. Again, the dollar swing is bounded by the size of the change in amount realized.

Where the California Measure ULA repeal genuinely shifts basis math is in the entity-level analysis. If the LA property is held in a partnership or S-corp, the gain flows to partners/shareholders via K-1, and each owner’s outside basis adjusts under §705 or §1367. The selling expense reduces the gain that flows to each owner pro rata. Owners with §754 elections in the partnership context get a basis bump on death of a prior owner, which interacts with the gain calculation in non-trivial ways. The California Measure ULA repeal doesn’t change this mechanically; it just changes the size of the gain that flows through.

For NYC clients holding LA property in a single-member LLC (disregarded entity): the property is treated as owned directly by you for federal and NY purposes, and the analysis is identical to direct ownership. The California Measure ULA repeal effect on selling expense is the same.

For NYC clients holding LA property in a multi-member LLC taxed as a partnership: gain flows via K-1, and ULA flows as a partnership-level selling expense reducing the gain at the entity level. Each partner’s share of the reduced gain flows to their personal returns. The California Measure ULA repeal benefit reaches each partner proportionally.

For NYC clients holding LA property in an S-corp (rare, but happens with operating real estate): same K-1 flow-through mechanism. The California Measure ULA repeal benefit reaches shareholders proportionally to ownership.

For NYC clients holding LA property in a C-corp: ULA reduces corporate-level taxable gain. The California Measure ULA repeal benefit accrues at the corporate level and only reaches shareholders if and when distributions are made (subject to the standard double-tax). For most operating real-estate, C-corp ownership is the wrong structure for other reasons, but if you’re stuck in one, the California Measure ULA repeal still helps at the corporate level.

One last point worth flagging: the federal side cares about the substance of the transfer tax, not its label. If a future challenge characterizes ULA (or post-repeal residual transfer-tax surcharges) as something other than a transfer tax, the §1001(b) selling-expense treatment could shift. We don’t expect this, but it’s a tail risk worth having on the radar for any unusually structured deal.

The California Measure ULA repeal has reset the documentation standard for LA closings between today and December 2026. Closing statements that were boilerplate two years ago now need express language addressing repeal contingency, escrow holdbacks, post-close indemnity, and the §1.6045-4 information-reporting question. If your closing attorney isn’t already drafting this language by default, push them on it.

Closing statement line-item language. The standard ALTA settlement statement reflects ULA as a separate line item under transfer taxes. For deals closing before the California Measure ULA repeal effective date, this is straightforward — the line shows the 4% or 5.5% calculation and the seller (or buyer, depending on contract allocation) writes the check. For deals closing in the November 4 to December 9, 2026 window, the line item should be drafted with conditional language: “ULA payable at currently effective rate per City of LA ordinance; subject to refund/credit if California Measure ULA repeal certified effective before disbursement.” Some LA escrow companies have started using exactly this language; others haven’t caught up.

Escrow holdback structures tied to repeal contingency. The cleanest approach is a holdback equal to the differential between current ULA and 0.05% of sale price, held by the escrow agent or a mutually selected third party until the California Measure ULA repeal certification or rejection is final. On a $10M deal, that’s a ~$395,000 holdback. The release mechanism: if the repeal passes and takes effect, the holdback is refunded to the seller (or split per contractual agreement). If it fails, the holdback is released to the City of LA as additional ULA. The contractual language has to be precise about who bears the time-value-of-money cost during the holdback period and what happens if litigation extends the resolution into 2027.

An alternative structure: collect ULA at current rates and disburse to the City, but include a contractual indemnity in which the seller agrees to share any post-close refund the City might be ordered to pay if the California Measure ULA repeal somehow includes retroactive provisions (unlikely but worth covering). This structure is simpler operationally but exposes the seller to City credit risk if a refund claim arises.

ULA payment timing matters for a different reason: the LA Office of Finance treats ULA as accruing at close of escrow and payable within a specified post-close window. If you close November 30, 2026 and the California Measure ULA repeal certification happens December 9, 2026, did your ULA accrue under the old or new rate? The City’s position will be old-rate (close-of-escrow controls). The taxpayer’s position may be new-rate (payment date is post-effective). This will be litigated in early 2027. To preserve your refund-claim position, your closing documents should expressly reserve the right to seek refund if a court rules favorably and you should pay under protest if appropriate. Your closing attorney should know the protest-payment language for the specific city; if not, it’s a red flag.

Post-close indemnity language is essential for any deal closing in 2026. Standard purchase agreement indemnities don’t address ULA-specific risks like exemption claim disputes, aggregation challenges, or post-close audit findings. A purpose-built ULA indemnity should: (1) survive close for the statute of limitations period (4 years for CA tax matters under R&TC §19057, plus extension provisions); (2) allocate the cost of any post-close ULA assessment between buyer and seller per the original contract allocation; (3) include cooperation duties for audit defense; and (4) carve out the California Measure ULA repeal vote outcome from the indemnity scope (since neither party can control that).

The §1.6045-4 reporting question. Treas. Reg. §1.6045-4 requires reporting persons (typically the closing agent) to file Form 1099-S for the sale of real estate, including the gross proceeds. ULA is not gross proceeds — it’s a transfer tax — and shouldn’t be included in the 1099-S amount. But some closing agents have included ULA in the reported gross proceeds, which inflates the seller’s reported amount realized and creates a reconciliation problem on the seller’s federal return. Verify the 1099-S amount before close and confirm it equals the contract sale price, not sale price plus ULA. The California Measure ULA repeal will reduce this risk going forward (because 0.05% is a small enough number that 1099-S errors don’t materially distort the gain calculation), but for 2026 closings under current rates, this remains a live issue.

Form 593 reporting. CA non-resident sellers (i.e., NYC clients selling LA property) must complete Form 593 at close, which the buyer/escrow uses to determine California withholding (typically 3.33% of sale price unless an exemption applies). The California Measure ULA repeal doesn’t change Form 593 mechanics, but it’s worth confirming with escrow that ULA is treated as a selling expense and not part of the withholding base.

Your tax preparer’s documentation file. We ask clients selling LA property to send us six things at close: (1) the final ALTA settlement statement; (2) the purchase agreement and any addenda addressing ULA; (3) the Form 1099-S issued at close; (4) the Form 593 issued at close; (5) the basis worksheet showing original purchase price plus capital improvements minus accumulated depreciation; and (6) any escrow holdback or indemnity agreement language. With these six documents, we can complete federal Schedule D, CA Form 540NR, NY IT-201 with IT-112-R credit, and any required Form 8949 reporting cleanly. Without them, every line item is a fight.

One more drafting nuance worth knowing. The California Measure ULA repeal text creates a refund right for taxpayers who paid ULA at rates above 0.05% on transactions that close after the repeal’s effective date. To preserve that right for any deal closing in November 2026, the closing attorney should include explicit reservation language in the closing statement and the seller’s check-payment instructions. “Paid under protest pending resolution of California Measure ULA repeal” is the type of language that protects refund-claim eligibility under R&TC §5097 and the City’s parallel refund procedures. Without this language, refund claims become harder to substantiate even if the legal grounds are clear.

The bottom line on documentation: every LA closing between today and mid-2027 needs ULA-specific contractual language. The California Measure ULA repeal vote creates contingencies that boilerplate closing documents weren’t designed to address. Your closing attorney should be drafting purpose-built language; your tax preparer should be auditing the closing statement for the issues above; and you, as the seller, should have a clear understanding of where the dollars are flowing and under what conditional logic. Fix this on the front end and the back end takes care of itself.