Mansion Tax Mayhem: LA Homeowners Scramble to Unload Properties

If you have a spare few million dollars, you may be able to snap up a Los Angeles mansion at a bargain before April 1.

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Some Los Angeles homeowners are looking to make a last-minute sale thanks to a new tax soon coming into effect.

Proposition ULA, commonly referred to as the "mansion tax," was approved by voters in Los Angeles last November and will come into effect on Saturday, April 1.

The new measure will impose a 4 percent tax on property sales above $5 million and a 5.5 percent tax on properties above the $10 million mark, with the seller paying the tax.

The city of Los Angeles will use the funds from this tax for affordable housing projects and homelessness prevention. While it was initially projected to raise $1.1 billion for affordable housing initiatives, the city lowered that estimate to $672 million last week.

Not everyone is a fan of the tax.

Real estate agent Josh Altman who appears on the Bravo TV show Million Dollar Listing Los Angeles, is critical of the tax.

"How do you tax a certain group of people, rather than everybody? Why not make it across the board? If you sell your house, no matter what the price is, 1 percent could go to helping the homeless and building affordable housing.”

The impending tax is leading to some last-minute sales.

According to the Hollywood Reporter, there are some million-dollar discounts this week, including:

• Paramount Realty USA is auctioning off an "undeveloped 260-acre Senderos Canyon in Bel Air. In an attempt to woo buyers quickly, owner Giro Properties has announced a $2 million discount if the deal is closed before April 1, "
• and a "Bel Air mansion at 1035 Stradella Road.. with a $1 million closing bonus to a buyer’s agent who will close on the property before April 1."

Your thoughts

Do you agree the mansion tax is a good idea? Is it fair to only add the tax to properties above $5 million, or should all real estate sales attract this tax?

Please leave your thoughts in the comment section below and share this article with others so more people can join the discussion.