At present, it is uncertain whether the worth or value of properties will be calculated by property or in combination for portfolio sales involving more than one parcel of real estate in the city of Los Angeles. Furthermore, the Los Angeles City Council holds the right to pass ordinances to exempt from the new tax real estate purchased by non-profit organizations to create affordable housing with limited income. The state of California and several departments in Los Angeles County, including the Office of Cannabis Management, will necessitate additional permits and licenses when the permit program is launched. If the measure is approved in court, Los Angeles could experience a cooling effect on real estate investment, following the example of San Francisco.
The current document transfer tax in the city of Los Angeles is a combined municipal and municipal tax of 0.56% of the consideration or value. The chief financial officer of the City of Los Angeles is responsible for preparing regulations that will provide more details on calculations and application. The fund will be used exclusively in accordance with the Los Angeles Program to prevent homelessness and to finance affordable housing (House LA Program). The Los Angeles City Treasury will create and establish a special trust fund, to be called the “Los Angeles House of Representatives Fund,” for the deposit and use of all taxes collected under Measure ULA.
The Howard Jarvis Taxpayers Association and the Los Angeles Metropolitan Area Apartment Association have filed a lawsuit against the City to invalidate the tax for violating the California Constitution, which prohibits real estate taxes when the proceeds are used for specific purposes. Property owners in Los Angeles are facing a new transfer tax with the recent approval of the measure from the United States to the Los Angeles House of Representatives (Measure ULA). The Los Angeles City Council may modify any provision of the ULA Measure initiative, provided that (such amendments) promote or facilitate the purposes of the House of Representatives Fund for Los Angeles, and (none of these amendments) may increase the tax collected without the voter approval required by Article XIII of the California Constitution (Proposition 1), among others. Graph 1 shows the annual growth in sales volume for the country as a whole compared to two major cities in California, San Francisco and Los Angeles.
The California voter initiative process provides citizens with a way to propose laws and constitutional amendments without support from either the governor or legislature. This article will explain how this new measure works, including tax breaks and what funds will be used for, analyze any rejection observed so far, and analyze other similar measures that have been enacted elsewhere in California. This is different from the current document transfer tax imposed by both city and county of Los Angeles. The new measure approved by voters in Los Angeles County is known as Measure ULA. It imposes a 0.5% transfer tax on all real estate transactions within city limits.
This is an increase from the current document transfer tax imposed by both city and county of Los Angeles which is 0.56%. This new measure is intended to help fund affordable housing initiatives within Los Angeles County. The funds generated from this new measure will be deposited into a special trust fund called “Los Angeles House of Representatives Fund” which will be managed by the Los Angeles City Treasury. These funds will be used exclusively for preventing homelessness and financing affordable housing initiatives within Los Angeles County. The Howard Jarvis Taxpayers Association and other organizations have filed lawsuits against this new measure claiming that it violates California Constitution which prohibits real estate taxes when proceeds are used for specific purposes. However, if this measure is approved by court then it could have a cooling effect on real estate investment within Los Angeles County similar to what happened in San Francisco. The Los Angeles City Council also has authority to pass ordinances which can exempt certain properties from this new transfer tax such as those purchased by non-profit organizations for creating affordable housing with limited income. In conclusion, Measure ULA is an important initiative taken by voters in Los Angeles County which could help fund affordable housing initiatives within city limits.
It could also have a cooling effect on real estate investment if approved by court. However, there are still some legal challenges that need to be addressed before this measure can be implemented.