LA’s Mansion Tax Stays Intact as Committee Kills Reform, and July 1 Brings New Thresholds
On May 29, 2026, the Los Angeles City Council’s ad hoc committee on Measure ULA held its final meeting and announced it will not recommend a ballot measure to amend the transfer surcharge. Meanwhile, the tax’s inflation-adjusted thresholds change on July 1 — transactions above $5.4 million and $10.9 million will trigger ULA starting next month, up from the current $5 million and $10 million. Reform isn’t coming from the Council. Whether it comes from voters in November depends on a Howard Jarvis ballot measure.
What the ad hoc committee actually decided
Committee Chair Ysabel Jurado announced on May 29 that the committee would not move forward with recommending a ballot measure to modify the tax. The committee will instead propose only administrative and technical adjustments — mostly around appeals processes and hardship provisions — rather than any structural change to the rates or thresholds.
This effectively ends the Council-driven reform effort that had been discussed for much of 2026. Earlier proposals from various council members included exemptions for residential sellers, reduced rates for certain property types, and adjustments specifically for Palisades fire victims. None made it through. The committee’s position is that the tax is working as intended and that reform should be left to voters if they choose to pursue it.
What this means for transactions: If you or your clients have been waiting for a Council fix before closing an LA real estate deal above the ULA threshold, stop waiting. The Council is done. The only path to structural change now runs through the November ballot — and even if the Howard Jarvis measure passes, it won’t take effect immediately.
The July 1 threshold changes
Measure ULA includes an annual inflation adjustment. Effective for transactions closing on or after July 1, 2026, the new thresholds are:
- Transactions between $5,400,000 and $10,900,000: 4% transfer surcharge
- Transactions above $10,900,000: 5.5% transfer surcharge
The prior thresholds were $5,000,000 and $10,000,000. The increase is modest in dollar terms but matters at the margins. A commercial property that sells at $5.3 million in June won’t trigger ULA. The same property sold in July after the threshold moves to $5.4 million also won’t trigger ULA. But a property priced at $5.2 million that a seller was considering marketing above $5 million to test the market now has slightly more room to stay below the threshold if it can attract a buyer under $5.4 million.
Sellers of properties in the $5 million to $5.4 million range should be aware that pricing decisions made before July 1 using the current threshold no longer apply after July 1.
Where the tax stands financially
The City of Los Angeles Office of Finance reports that as of May 2026, Measure ULA has raised approximately $1.2 billion since it took effect in April 2023. The city had originally projected $0.6 to $1.1 billion per year. Three years in, the annual run rate is roughly $400 million — below even the low end of projections.
The underperformance reflects the overall slowdown in high-end Los Angeles real estate transactions, which dropped sharply when ULA took effect. Transaction volume above the $5 million threshold declined significantly. Sellers repriced below the threshold where possible, and many deals simply didn’t happen. This is the basic economics of a transfer tax: at a high enough rate, it changes behavior rather than just extracting revenue.
Critics have been saying this for three years. Proponents argue the tax is still producing substantial affordable housing and homelessness funding. Both things can be true simultaneously — the tax raised real money while also suppressing more transactions than projected.
The November ballot threat
The Howard Jarvis Taxpayers Association’s Local Taxpayer Protection Act qualified for California’s November 2026 ballot after the Secretary of State certified it on May 3, 2026. If it passes, the measure would cap local real estate transfer taxes statewide at 0.05% — effectively gutting Measure ULA’s 4% and 5.5% rates overnight.
Passage requires a simple majority statewide. The measure would not just affect LA — it would also prevent other California cities from enacting similar transfer taxes in the future. Given the deep-pocketed opposition expected from housing advocates and several California cities with their own transfer tax ambitions, the ballot fight will be expensive and genuinely uncertain.
For anyone planning a large LA property transaction in 2026, the November ballot creates a real timing question. A property sold in August at $7 million pays $280,000 in ULA at the 4% rate. If the Howard Jarvis measure passes in November and takes effect before year end, a similar transaction in December might owe nothing. The legal effective date of the ballot measure matters, and sellers with flexibility should track this closely.
The practical planning point: No one should delay a transaction indefinitely on the basis that the Howard Jarvis measure might pass. It might not. But if a seller has legitimate flexibility in closing timing — say, a commercial deal where the buyer can accommodate a 90-day extension — the November result is worth factoring into the timeline discussion.
How this affects Reedcorp clients
Clients with LA investment property or rental portfolios
Most real estate clients who hold LA property for the long term won’t trigger ULA unless they sell. The July 1 threshold adjustment doesn’t change the economics for holds. But if a sale is being considered in the next 12 months, the combination of the July 1 threshold changes and the November ballot makes a precise analysis of closing timing worthwhile.
Clients considering purchasing LA property above the threshold
ULA is a seller’s tax, so buyers don’t pay it directly. But transfer taxes affect transaction economics — sellers factor them into pricing, and deals above the threshold that would have closed at certain prices often don’t close at all. Buyers competing in the $5 million to $15 million LA market should understand that the seller’s ULA burden is part of the negotiation even if it’s not explicitly on the table.
Clients who moved to LA or own LA property through an entity
ULA applies to all transfers, including transfers to LLCs or trusts. The ordinance’s treatment of non-sale transfers has been a source of confusion since the tax launched. Transferring an LA property to an LLC or family trust can trigger ULA if consideration changes hands or if the transfer is deemed a taxable event under the ordinance. If you’re planning any ownership restructuring of LA real estate, the ULA analysis has to come first.
Common questions
Does the July 1 threshold change affect deals currently in escrow? The relevant date is the recording date, not the contract date. If a deal closes and records before July 1, the current thresholds ($5M and $10M) apply. If the transaction records on or after July 1, the new thresholds ($5.4M and $10.9M) apply. Transactions currently in escrow with expected closings in late June should confirm the recording will happen before July 1 if they’re at a threshold-adjacent price.
What is the status of the legal challenges to Measure ULA? Legal challenges from the Howard Jarvis Taxpayers Association have continued through the courts, arguing that Measure ULA required a two-thirds majority rather than a simple majority to pass. As of spring 2026, those challenges have not succeeded in overturning the tax. The ballot measure represents the next front of that fight.
Does ULA apply to foreclosure sales? The City of LA’s Office of Finance has provided guidance that some involuntary transfers are excluded. Foreclosure sales and lender REO dispositions may not trigger ULA, but the treatment depends on the specific structure. Anyone involved in a distressed property situation above the threshold should verify the application before assuming an exemption applies.
How does ULA interact with California capital gains tax on a sale? ULA is a transfer surcharge paid to the city — it’s separate from the California and federal capital gains tax that arises on the sale gain. ULA is a transaction cost that reduces net sale proceeds, which in turn reduces your taxable gain. But ULA itself is not a deductible business expense in all cases, and the treatment on a personal residence sale differs from a rental or investment property sale. Get the full picture before closing.