In November 2022, Los Angeles voters approved Measure ULA — “United to House LA” — by a comfortable margin. The pitch was intuitive and popular: put a small tax on the sale of multimillion-dollar properties, and pour the money into affordable housing and homelessness prevention. The campaign nickname stuck immediately. People called it the mansion tax.
That nickname is doing a lot of work — and it’s the source of most of the confusion about what this tax actually does. Because Measure ULA isn’t really a tax on mansions. It’s a tax on transactions, and the properties most often caught above its threshold aren’t Beverly Hills estates. They’re apartment buildings, commercial sites, and the development land that new housing gets built on. Three years in, a growing stack of academic research suggests that distinction matters enormously — and that the tax designed to fund housing may be suppressing it.
Measure ULA adds a 4% transfer tax on LA city property sales over ~$5.4M and 5.5% over ~$10.9M, paid by the seller on the full price. It has raised over $1 billion for affordable housing. But peer research from UCLA, RAND, and the Cato Institute now links it to roughly 1,910 fewer apartments built per year and finds that much — possibly all — of its revenue is cancelled out by lost future property taxes. It mostly taxes apartments and development land, not luxury single-family homes.
First, What ULA Actually Taxes
Measure ULA took effect on April 1, 2023. It layers a new transfer tax on top of the city’s existing one, applied to the entire sale price the moment a property trades above the threshold — not just the amount over it. The thresholds adjust annually for inflation. For transactions closing after June 30, 2026, they sit at approximately $5.4 million (4%) and $10.9 million (5.5%), up modestly from the original $5M and $10M.
Crucially, the tax applies to almost every kind of real property sold inside LA city limits above that line — apartment buildings, retail, office, industrial, and the land developers buy to build new homes. It is not limited to single-family homes. And that’s where the “mansion tax” framing breaks down. As the UCLA Lewis Center put it, most high-dollar property transactions in LA aren’t luxury houses at all — they’re income property and development sites.
Illustrative shares of high-value transaction volume based on UCLA Lewis Center findings that luxury single-family homes are a minority of ULA dollars and multifamily sales are under 10% of annual revenue. Categories are directional, not exact percentages.
The Core Question: Does It Build More Housing — or Less?
This is the heart of the matter, and it’s exactly the right question to ask. A tax that funds affordable housing is only a net win if it doesn’t choke off market-rate housing in the process. Permits for new multifamily housing in LA fell sharply after April 2023 — but the market was also wrestling with high interest rates and construction costs at the same time, so the tax can’t simply be blamed by association.
The key 2025 study, Taxing Tomorrow, from researchers at RAND and the UCLA Lewis Center, set out to isolate the tax’s specific effect. By comparing the City of LA (where ULA applies) against surrounding cities in LA County (where it doesn’t), the authors established what they call a robust causal link. Their conservative estimate: Measure ULA is reducing multifamily production by at least 1,910 units per year — an 18% decline relative to the 2020–2022 average for projects of 20 or more units — including roughly 168 affordable units that would have been built without any public subsidy at all.
The takeaway: When you tax a transaction heavily, you get fewer transactions. Owners hold rather than sell, and the sites most likely to become new housing stop changing hands.
Sources: Cato Institute (2025); UCLA Lewis Center / Manville & Smith (2025); UCLA estimate cited by Hanson Bridgett (2026). Figures are independent estimates using different methods and time windows.
Why would a tax on selling property reduce building? The chain is mechanical, and it’s the part most people miss. New housing usually starts when someone sells a development site to a builder. ULA taxes that sale. So two things happen: owners who would have sold instead hold their land, shrinking the supply of buildable sites; and on the sites that do sell, builders have to lower their land bids to absorb the tax cost — which means they get outbid by buyers who aren’t building housing at all. The tax meant to fund housing makes housing land harder to assemble.
Unit and revenue figures: RAND/UCLA Lewis Center, “Taxing Tomorrow” (2025), and UCLA/Manville & Smith (2025). Estimates, not guarantees.
But It Raised Over $1 Billion — Doesn’t That Count?
It does, and any honest analysis has to sit with this. By January 2026, Measure ULA had collected more than $1 billion — by far the largest local source of affordable-housing and tenant-protection funding the city has. Supporters make a fair point: the money is real, it’s now flowing out through major funding rounds, and a static study that assumes “but for the tax” everything else stays equal can overstate the damage. Markets adjust. Land values adjust. People still sell when life requires it.
The complication is on the other side of the ledger. Because California’s Proposition 13 only lets a property be reassessed when it sells, fewer sales means fewer reassessments — and a smaller growing property-tax base for years to come. A 2025 Cato Institute study estimated that the transaction rate of eligible properties fell about 38%, and that somewhere between 63% and 138% of ULA’s revenue is offset by that lost future property-tax revenue. At the high end of that range, the city, county, and schools collect less overall than they did before.
Revenue total: City of LA, reported January 2026. Offset range: Cato Institute, “The Effect of the Los Angeles Mansion Tax on Property Tax Revenue” (Dec 2025). The offset depends on assumptions about future sales and price growth.
The Honest Counterargument
This isn’t a settled debate, and we won’t pretend it is. ULA’s defenders — including affordable-housing and tenant advocates — argue the critical studies lean on static assumptions and that the program was designed to be judged over a longer horizon, not two volatile post-pandemic years that included the 2025 wildfires. They note that local housing dollars leverage four to five times as much outside funding, that the biggest benefits are still ahead as the first major rounds deploy, and that the revenue has climbed steadily each quarter as the market found its footing. These are legitimate points, and the long-run picture genuinely isn’t written yet.
Where most observers now agree: the “mansion tax” label oversold a far broader tax, the design didn’t distinguish between a Bel Air estate and an apartment-development site, and that lack of nuance is producing real friction in exactly the market segment that builds housing. That’s why even some former supporters, along with the mayor and lawmakers in Sacramento, have floated reforms — most notably a new-construction exemption.
What This Means If You Own or Are Selling High-Value LA Property
For our clients, the takeaways are practical, not political. First, geography is everything: ULA applies only inside City of LA limits. A property in an unincorporated area or a separate city — Culver City, Beverly Hills, Santa Monica — isn’t subject to it, which has measurably shifted some buyer interest just across city lines. Second, because the tax hits the full sale price the moment you cross the threshold, deals priced just above a breakpoint deserve careful structuring and timing. Third, the rules are genuinely in flux — a council rewrite and a statewide repeal effort are both live for 2026 — so anyone planning a sale of a $5M-plus LA asset should be tracking it closely.
None of this is tax or legal advice, and the figures here move with the market and the law. But understanding what ULA really is — a broad transfer tax wearing a mansion-tax label — is the first step to planning a high-value sale intelligently. That’s exactly the kind of read we bring to a first conversation.
Figures cited are current as of May 2026 and drawn from the City of LA Office of Finance, the UCLA Lewis Center, RAND, and the Cato Institute. Tax thresholds, rates, and the status of reform efforts change; treat these as a snapshot, not a guarantee. This article is for informational purposes only and is not tax, legal, financial, or investment advice — consult a qualified tax advisor or attorney about your specific situation.
