If you’re selling Los Angeles real estate worth $5 million or more, Measure ULA—the so-called “mansion tax”—will likely cost you between 4% and 5.5% of your gross sale price. On a $10 million sale, that’s $550,000. On a $20 million commercial property, it can exceed $1.1 million. And it stacks on top of the existing 0.45% city and 0.11% county documentary transfer taxes.

The good news: Depending on the specific facts, applicable exemptions, and legal structure of the transaction, there may be lawful ways to reduce, defer, or in limited cases eliminate Measure ULA exposure, but outcomes vary and are not available in every situation. The basic strategies are publicly known—built-in exemptions, timing choices, structural decisions—and we walk through them below. For transactions well above the threshold, a more sophisticated planning approach is needed. It is not appropriate for every situation, but for clients who qualify, it can dramatically reduce or eliminate the tax. We discuss when the advanced options may apply later in this guide—and what we would need to know about your transaction to evaluate them.

This article covers:

  • What Measure ULA is and when it applies
  • The exemptions built into the ordinance
  • Practical strategies that work within the law
  • When basic strategies aren’t enough—and what advanced planning may apply
  • Key considerations before you close
  • Frequently asked questions

Quick summary: If your sale is under $5.15 million (the 2026 threshold), ULA doesn’t apply. If it exceeds the threshold, available planning options include: (1) qualifying for a built-in exemption (affordable housing, nonprofit transfers, bona fide gifts, marital and inheritance transfers, foreclosures, bankruptcy, or mere change in form); and (2) deal-level choices on pricing, timing, and structure. For more advanced options, contact Cerity Partners for a confidential analysis to determine whether any strategy may be appropriate based on your specific facts and applicable law.

What is Measure ULA?

Measure ULA—formally the “Homelessness and Housing Solutions Tax”—is an additional transfer tax imposed by the City of Los Angeles on transfers of real property within city limits. It was approved by LA voters in November 2022 and took effect April 1, 2023.

The tax adds:

  • 4% additional transfer tax on sales above approximately $5.15 million (2026 threshold)
  • 5.5% additional transfer tax on sales above approximately $10.3 million (2026 threshold)

These thresholds adjust annually for inflation. Unlike the base documentary transfer tax (which is calculated net of liens), Measure ULA applies to the gross sale value—including any assumed mortgages or other encumbrances. This detail matters substantially for leveraged property.

Measure ULA applies to both residential and commercial property within Los Angeles city limits. It does not apply to property in unincorporated LA County or in surrounding cities (Santa Monica, Beverly Hills, Culver City, Pasadena, etc.).

When does Measure ULA apply?

The tax generally applies when the following conditions are met:

  1. The property is located within the City of Los Angeles (not LA County generally); and
  2. The transfer is for consideration above the inflation-adjusted threshold ($5.15 million or $10.3 million in 2026).

Standard exemptions built into Measure ULA

Several exemptions are built into Measure ULA itself or inherited from the base documentary transfer tax (DTT) framework. The Los Angeles Office of Finance confirmed in July 2023 that all base DTT exemptions also apply to ULA. The key exemptions include:

  • Transfers to qualified affordable housing entities. Properties transferred to certain qualified affordable housing nonprofits, community land trusts, or limited-equity housing cooperatives may qualify for exemption. This is a significant carve-out used by developers and institutional sellers, but the qualification requirements are strict.
  • Transfers to government agencies. Transfers to federal, state, or local government entities are exempt.
  • Transfers to certain nonprofit organizations. Transfers to qualified 501(c)(3) organizations—particularly those with affordable-housing track records—may qualify.
  • Bona fide gifts. Transfers without consideration are exempt under R&TC §11911. The grantor must receive nothing in return.
  • Foreclosure and deed in lieu of foreclosure. Per LA Office of Finance July 2023 guidance, these transfers are exempt from ULA.
  • Bankruptcy proceedings. Transfers in bankruptcy contexts are generally exempt.
  • Marital dissolution. Transfers between spouses in connection with divorce are exempt.
  • Inheritance and testamentary transfers. Transfers at death are exempt.

If your situation involves any of these scenarios, you may not owe ULA at all. The exemption analysis is fact-specific—small details about how a transfer is structured or documented can determine whether it qualifies.

Basic strategies to reduce or avoid ULA

Beyond the built-in exemptions, several practical strategies are available depending on the circumstances, but each have reasonable limits. These basic strategies are intended for sales that are close to the ULA threshold; advanced strategies, discussed later in this insight, are available for larger transactions.

1. Price negotiation below the threshold. If your property is genuinely near the threshold, structuring the sale at or below $5.15 million (or $10.3 million, depending on tier) eliminates that tier of tax. This requires accepting a lower headline price—for property priced at $5.2 million, the $200,000+ tax savings may justify a small reduction. For property substantially above the threshold, this isn’t viable.

2. Strategic timing around Consumer Price Index adjustments. The thresholds increase annually with inflation. If your transaction has flexibility on closing date and your price is near the threshold, timing the close just after a threshold increase can move you below the cutoff. The effect is modest but real.

3. Property splits used carefully. Some sellers split a single parcel into multiple legally separate parcels and sell them in separate transactions, each below the threshold. One important caveat: The LA Office of Finance and California assessors take an aggressive view of “stacking,” which means multiple transactions between the same parties that look like a single underlying deal are vulnerable to substance-over-form challenge. This approach may be available only for genuinely separate transactions to unrelated buyers and requires careful documentation, with outcomes depending on the specific facts and applicable law.

4. Affordable housing redevelopment. For developers and certain institutional sellers, redeveloping the property as qualified affordable housing may unlock the affordable-housing exemption. This requires actual affordable units, not nominal restrictions, but for the right project, it can eliminate ULA entirely.

A common misconception is that a Section 1031 exchange avoids Measure ULA—it does not. A 1031 exchange defers federal and California income tax on the gain, but the documentary transfer tax and ULA still apply at recording. If you’re planning a 1031 exchange, plan for the ULA liability separately.

When basic strategies aren’t enough: Advanced planning for high-value properties

For properties significantly above the thresholds—$20 million, $50 million, or over $100 million—the basic strategies described above may not be available, sufficient, or defensible. For these situations, there is a more sophisticated approach. When properly implemented, it can avoid the base documentary transfer tax and Measure ULA simultaneously.

The strategy is not appropriate for every transaction. In certain circumstances, potential savings may be significant. For example, based on assumed facts and if the structure is legally available and properly implemented, a $30 million Los Angeles commercial property transaction could materially reduce Measure ULA exposure; actual results will vary.

However, the technique requires client-specific analysis, careful execution, and ongoing planning discipline that is not well served by a how-to guide. If your transaction is well above the ULA thresholds and you have flexibility on how the acquisition is structured, the approach may be worth a confidential conversation.

Key considerations before you close

Here are a few practical considerations regardless of which strategy you ultimately pursue:

  • Get the analysis done early. Most effective planning must happen before a deal is signed. Once a purchase agreement is in place, your options narrow considerably. The advanced approach in particular is almost always an acquisition-stage decision—not something that can be added at closing.
  • Don’t rely on form alone. California courts have applied substance-over-form analysis in property tax contexts. Documentation must align with economic reality. Aggressive paper structures that contradict economic substance invite challenges from the LA Office of Finance and the County Assessor.
  • Be aware of Board of Equalization (BOE) Form 100-B reporting. Any change in control or change in ownership of a legal entity holding California real property requires a BOE-100-B filing—independently of whether reassessment is triggered. Failure to file carries meaningful penalties. The State Board of Equalization increasingly uses Form 100-B to develop the factual record before issuing reassessment notices.

If your Los Angeles real estate transaction is above $5 million—and especially if it’s well into seven or eight figures—the planning return from getting the structure right can be substantial. Standard exemptions cover some situations. For others, more sophisticated planning is needed. Reach out to our office at 424-502-3500 or visit our practice page to schedule a confidential consultation.

Frequently asked questions

Both. Measure ULA applies to residential and commercial real estate transfers within the City of Los Angeles when the sale price exceeds the threshold.

No. ULA is a City of Los Angeles tax. Property in unincorporated LA County, Santa Monica, Beverly Hills, Culver City, Pasadena, or other surrounding cities is not subject to ULA. (Some of those cities have their own real property transfer taxes, but they are separate from Measure ULA.)

In principle, yes—if both parties accept the lower price. For property genuinely worth a few hundred thousand above the threshold, this may work. For property substantially above the threshold, the price reduction required usually isn’t a viable strategy.

No. Section 1031 defers federal and California income tax on the gain, but the documentary transfer tax and Measure ULA still apply when the deed is recorded.

True bona fide gifts (no consideration) are exempt. Sales for consideration to family members are subject to ULA. Transfers at death (inheritance) are exempt, and certain marital transfers in dissolution contexts are exempt.

Yes, when properly structured. The qualification requirements are demanding—actual affordable units with binding restrictions, qualified nonprofit ownership, and ongoing compliance—but for projects that genuinely fit, the exemption can eliminate ULA entirely.

Most effective planning happens before the purchase agreement is signed. For the advanced structuring approach, planning generally needs to begin during the letter-of-intent or term-sheet phase. The window narrows significantly once a deal is under contract.

Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser with offices across the United States. Registration as an investment adviser does not imply any level of skill or training. The information provided is not intended as personalized investment, tax, or legal advice. There is no guarantee that any opinions, projections, or views expressed will materialize. You should consult a qualified professional before making financial decisions. Information is subject to change without notice and is believed to be reliable but is not guaranteed. For Cerity Partners’ registration status, please visit the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov. For additional details about our services, fees, or potential conflicts of interest, please request our disclosure statement, including Form CRS and ADV Part 2, using the contact information provided. ©2026 Cerity Partners LLC. All rights reserved.

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