Court decision lets ‘mansion tax’ stand in Los Angeles
- Nicole Apostolos
- 3 hours ago
- 2 min read
Challenge from taxpayers group rejected in appeals court
CoStar News
December 17, 2025 | 11:07 AM
A California appeals court poured cold water on the biggest challenge yet to the so-called mansion tax in Los Angeles, ruling that the Measure ULA ballot measure that created a tax on high-priced real estate is legitimate.
The Howard Jarvis Taxpayers Foundation and others asked the court to reverse the ruling that established Measure ULA because of potential conflicts with the city’s charter.
If passed, the amendment would have effectively dismantled the tax, which places a 4% levy, up from 0.45%, on property sales topping $5.15 million and a 5.5% charge on deals exceeding $10.3 million. It would also have limited the ability of any California city to impose similar levies.
The tax measure passed with 58% approval of LA voters in November 2022. It took effect in April 2023.
“The passage of Measure ULA pursuant to a majority vote of the city’s electorate was a valid exercise of the people’s initiative power,” wrote Justice Armen Tamzarian in an opinion published Monday on behalf of the California Court of Appeal, Second Appellate District. “Under the California Constitution, the people retain the power to enact special real property transaction taxes by local initiative.”
The tax has limited investment interest in Los Angeles when compared with cities without such a property levy, according to researchers at the UCLA Lewis Center. The group said the measure cost the city $25 million per year in taxes in the first two years of its implementation because the volume of transactions dropped.
After ULA passed, “permits dropped 20% overnight,” Sean Burton, CEO of locally based multifamily development firm Cityview, told CoStar News. Cityview has been the largest developer of multifamily projects in LA County for years but is down to its last project in the region because of sky-high expenses, Burton said.
Backers of the tax, however, say it has generated more than $830 million for housing and homelessness programs and helped restart nine housing projects totaling 795 units. More is on the way in 2026, according to Joe Donlin, director of United to House LA.
The mansion tax remains vulnerable to change. Mayor Karen Bass has proposed a one-time, three-year exemption from the tax for homeowners affected by the January 2025 Pacific Palisades fire. The aim is to expedite property sales, encourage rebuilding and support the area’s rapid recovery following the wildfire.
Bass has also championed a state-level legislative proposal — expected to be reintroduced in early 2026 — aimed at adjusting Measure ULA’s tax structure to exempt recently built multifamily properties, as well as shopping centers and warehouses, from the tax upon sale.
“You could fix this mansion tax and you would see a boom in housing overnight,” Burton said.