LA’s Measure ULA Amendment Talk: Single-Family Resi Pays Most, Gets Almost Nothing
What Measure ULA actually does
Measure ULA, passed by Los Angeles voters in November 2022 and effective April 1, 2023, imposes a documentary transfer tax on real property sales above certain thresholds within the City of Los Angeles. The 2026 thresholds, indexed annually, sit at:
- 4% on sales above $5.31 million up to $10.62 million
- 5.5% on sales at or above $10.62 million
The tax is a transfer tax, paid at closing. It is on top of LA County’s documentary transfer tax (0.11%) and the City of Los Angeles’s existing documentary transfer tax (0.45%). On a $12 million single-family sale within City of LA limits, the ULA-related cost is roughly $660,000 in addition to the existing transfer taxes. That is the line item that has reshaped the high-end LA market.
Measure ULA is not an income tax and not a property tax. It is a one-time transfer tax at sale. That distinction matters for federal treatment — ULA is a basis adjustment for the seller, reducing the realized gain. It is not deductible against ordinary income.
Why the resi market is paying almost 60% but getting almost no relief
The original Measure ULA framing was about institutional commercial transfers — office buildings, apartment complexes, mixed-use towers. In practice, the high-end residential market in Bel Air, Beverly Crest, Brentwood, Pacific Palisades, and Hollywood Hills has paid the largest share. The Real Deal’s reporting puts single-family residential at roughly 59% of the over $1 billion in ULA revenue since 2023.
The amendment package skips this almost entirely. Five of the six amendments target commercial transactions — affordable-housing exemption expansions, ground-lease treatment, intra-family-trust commercial transfers, foreclosure carve-outs, and an aging-affordable-housing-inventory exemption. The sixth, and only resi item, is a 3-5 year exemption for properties affected by the Palisades Fire and future declared natural disasters. That is a real exemption for a narrow group of owners. It does nothing for the broader luxury single-family market.
Reading the politics
The amendment package is the work of a coalition that wants ULA preserved as a revenue source while smoothing the rough edges that hurt commercial transactions. The coalition does not include the LA luxury residential brokerage community, whose preferred outcome is a higher threshold or a full residential carve-out. The political calculation is that residential carve-outs are unpopular — they look like tax breaks for the rich — while commercial carve-outs read as housing-policy tweaks.
The result is the opposite of efficient tax policy. The category paying the most is the category least represented in the reform conversation.
What this means for NYC clients with LA exposure
The clients we work with on this are typically in three groups: HNW individuals with a Beverly Hills or Brentwood second residence, real estate operators with mixed LA and NYC portfolios, and entertainment-industry clients (actors, agents, executives) who own homes in the Hollywood Hills or Pacific Palisades. The ULA picture for each is different.
Second-residence owners considering a sale
If the second home is in the City of Los Angeles and the contemplated sale price is above $5.31 million, ULA is in the math. The federal capital gains and California state tax pictures are unchanged. ULA reduces the seller’s net proceeds. The federal Schedule D treats ULA as a selling expense reducing amount realized.
Estate planning
Transfers at death step up basis at the federal level and avoid the realized gain. ULA is not triggered by death itself; it is triggered by a transfer for consideration. The intra-family transfer carve-out in the existing Measure ULA covers limited circumstances — a transfer to a revocable trust, certain transfers between spouses, transfers incident to divorce. A sale by the estate to a third party after death is fully subject to ULA.
Palisades Fire owners
The proposed 3-5 year exemption for Palisades Fire properties is meaningful for the narrow group of owners whose homes were destroyed in the January 2025 fires. Reedcorp clients with such properties should track the amendment language carefully — the exemption window, whether it applies to the original owner or any subsequent owner of the parcel, and whether it covers the rebuilt home or only the burned land.
The federal tax interplay most clients miss
Measure ULA is a transfer tax. The IRS treats transfer taxes paid by the seller as a reduction of amount realized under Section 1001. In plain terms, the seller’s realized gain on the federal Schedule D is reduced by the ULA paid. ULA is not a deduction against ordinary income, not a state tax payment that flows to Schedule A, and not subject to the federal SALT cap.
For a $12 million sale with $660,000 of ULA, the federal capital gain is roughly $660,000 lower than it would be without ULA. At the long-term federal rate of 20% plus the 3.8% net investment income tax, that is roughly $157,000 less in federal tax owed at the moment of sale. The state-level California treatment is parallel — ULA reduces the gain reported to the FTB.
ULA is expensive. The federal recapture of part of that expense softens the bite by about 20-23 cents on the dollar for most HNW sellers, depending on rate stack. Run the after-tax math, not the gross ULA number, when comparing a sale today to a sale in a hypothetical future where ULA has been reformed.
What we are telling LA clients to do now
- Do not wait for reform. The amendment package is one of several proposals circulating. None has been placed on a ballot. Tax planning should assume ULA stays in current form.
- If a sale is contemplated within 24 months: run the full federal-state-ULA after-tax model. The ULA cost can sometimes be offset by 1031 exchange treatment if the property is held for investment, not personal use. Personal residences do not qualify for 1031.
- For investment-property holders: consider whether a 1031 exchange into a non-LA-City property avoids the ULA bite entirely. Property in unincorporated LA County or in Beverly Hills (a separate city) is not subject to ULA. The federal 1031 rules are independent of California or LA City rules.
- For estate-planning clients: ULA is not triggered at death. The step-up at death plus heirs’ subsequent decisions is a different planning conversation than current-owner sale planning.
- For Palisades Fire-affected owners: if the proposed exemption advances, document the property’s pre-fire condition, fire damage, and rebuild status. The exemption is likely to require a documented chain.
How The Reed Corporation works with LA real estate clients
For NYC-based clients who own LA real estate, our work is the cross-coast tax picture. LA real estate investor tax services, NY real estate investor tax services, and the federal layer that ties them together. ULA is one moving piece. California’s 13.3% top capital gains rate, the federal 20% long-term plus 3.8% NIIT layer, and the New York treatment of California-source gain on a non-resident return all interact.
For our high-net-worth clients contemplating a luxury LA sale, we run the model in three scenarios — sale today, sale after a hypothetical ULA threshold increase, and sale via 1031 exchange into a different jurisdiction. The difference in net proceeds across the three scenarios is often material. Reform may happen. Planning that depends on it usually should not.
Common questions on Measure ULA
Does Measure ULA apply to property in unincorporated LA County?
No. Measure ULA is a City of Los Angeles tax. Property in unincorporated areas of LA County is not subject to ULA. Property in Beverly Hills, Santa Monica, Culver City, Pasadena, or any other separately incorporated city within LA County is also not subject. ULA stops at the City of LA boundary.
What about a property where the structure straddles the city boundary?
The legal description on the assessor’s record controls. If the parcel is officially within City of Los Angeles, ULA applies regardless of where the structure sits.
Is ULA deductible on my federal return?
It is not deductible as a tax payment. It is treated as a selling expense, reducing amount realized and therefore reducing capital gain. The economic effect on after-tax proceeds is similar but not identical.
Can I avoid ULA by transferring the property to a trust before sale?
No, with limited exceptions. Transfer to a revocable trust the seller controls is exempt because there is no change in beneficial ownership. Transfer to an irrevocable trust followed by the trust’s sale to a third party is generally treated as a transfer triggering ULA. Pre-sale planning to avoid ULA through entity restructuring rarely works under current rules.
Does Measure ULA apply to inherited property?
The transfer at death is not a sale. ULA does not apply to the moment of inheritance. A subsequent sale by the heirs or the estate is fully subject to ULA at the prevailing thresholds.
If the amendment package passes, does ULA get cheaper for residential sales?
Not under what has been floated so far. The five commercial amendments do not affect single-family residential. The Palisades Fire amendment is narrow. A broad residential threshold increase or carve-out is not in the current proposal set.
Is there a federal capital gains exclusion that helps with the ULA cost?
The Section 121 home sale exclusion ($250,000 single, $500,000 married filing jointly) applies to the federal capital gain on a primary residence held two of the last five years. It does not affect ULA at all. The federal exclusion and the city transfer tax are separate.
Source
The reporting that prompted this commentary appeared in The Real Deal on April 26, 2026.
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If you own Los Angeles real estate above the ULA threshold and are weighing a sale, refinance, or estate transfer, the after-tax math is more than the headline rate. We model the full federal, California, and ULA picture together.
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