In the City of Los Angeles, Measure ULA will impose an additional city real estate transfer tax of 4% on transactions between $5 million and $10 million and an additional 5.5% on transactions over $10 million.
In the City of Santa Monica, Measure GS will increase the city’s real estate transfer tax from 0.6% to 5.6% on properties valued over $8 million.
In the City and County of San Francisco, Measure M will impose a new residential vacancy tax on landlords that own three or more residential units.

During the 2022 midterms, California residents approved an array of local ballot measures that increase city-level transfer taxes, as well as add other new taxes on real property in California cities. Below we summarize the effects of Measure ULA (Los Angeles), Measure GS (Santa Monica), Measure M (San Francisco) and Measure K (Palo Alto). We also provide a chart of notable, similar measures that passed in recent election cycles.

Los Angeles – Measure ULA
Beginning on April 1, 2023, the City of Los Angeles will impose an additional 4% transfer tax on properties sold or transferred for more than $5 million and a 5.5% tax on properties sold or transferred for more than $10 million. This additional transfer tax is in addition to the current county and city transfer tax rates of 0.11% and 0.45%, respectively, increasing the total transfer tax rate to 4.56% on transactions between $5 million and $10 million and to 6.06% on transactions of $10 million or more. Unlike the pre-existing transfer taxes, the new tax under Measure ULA will apply to the entire value of the property, including any lien or encumbrance remaining on the transferred property at the time of the sale assumed by the transferee. Transfers of real property to certain governmental entities and transfers to nonprofits, community land trusts and limited-equity housing cooperatives that demonstrate a history of affordable housing development may qualify for an exemption.[1]

Measure ULA imposes a special tax since the proceeds are earmarked to fund homelessness prevention and affordable housing initiatives.[2] To avoid the additional tax and uncertainty surrounding the exemptions, developers and property owners will likely be rushing to close their transactions before the April 1, 2023, effective date.

Santa Monica – Measure GS
Beginning on March 1, 2023, the City of Santa Monica will increase its real estate transfer tax from 0.6% to 5.6% on properties valued over $8 million. Real property transactions between $5 million and $8 million will continue to pay a 0.6% city transfer tax and transactions under $5 million will continue to pay a 0.3% city transfer tax. The foregoing city transfer tax rates are in addition to the 0.11% County of Los Angeles tax rate, which brings the new total transfer tax rate for transactions over $8 million in the City of San Monica to 5.71%. Measure GS imposes a special tax since the proceeds are earmarked for homelessness prevention initiatives, housing projects and schools.

San Francisco – Measure M
Beginning on January 1, 2024, the City and County of San Francisco will impose a new vacancy tax on landlords that own three or more residential units. The vacancy tax ranges from $2,500 to $5,000 per empty unit, depending on the unit’s size, and can increase to as much as $20,000 if a unit is vacant for more than three years. A unit is considered vacant if it is unoccupied for over 182 days out of the calendar year, excluding certain periods for repair, rehabilitation or construction and periods after natural disasters. Exemptions apply to single-family homes, duplexes, primary residences, property for transient residences or units owned by governmental entities or nonprofits. Tax proceeds from the measure will capitalize a Housing Activation Fund that supports rental subsidies for low-income individuals aged 60 or older and affordable housing projects. The new residential vacancy tax will become the third of its kind in the United States following similar measures in Washington, DC, and Oakland, CA.

Palo Alto – Measure K
Beginning in January 2023, the City of Palo Alto will impose a monthly tax of 7.5 cents for each square foot of space above 10,000 square feet occupied by a business. The tax will not apply to grocery stores, residential properties, vacant and unoccupied spaces, nonprofits, schools or banks and financial institutions. Offsets or tax credits will be made available for businesses that remit transient occupancy taxes or sales taxes, and the tax will be capped at $500,000 a year per business. Although tax proceeds from Measure K will go towards the city’s general fund, Palo Alto’s city council claimed it intends to apply the proceeds towards affordable housing and public safety initiatives.

Notable Measures from Recent Election Cycles That Increase City-Level Taxes on Real Property in California Cities (PDF)

1.  Part 6.7 of the California Revenue and Taxation Code allows counties and cities to impose a documentary transfer tax on real property transfers. It also includes exemptions for transfers in the event of a foreclosure, interspousal sale, or when proportional interests in the realty remain unchanged. Since the new transfer tax is drafted to be incorporated into the existing City of Los Angeles documentary transfer tax provision, which is administered in accordance with Part 6.7 [L.A.M.C. §§ 21.9.1, 21.9.9], we expect these existing exemptions to continue to apply. Nevertheless, some practitioners have expressed concern, particularly given that the City of Los Angeles’s Director of Finance is granted discretion to provide guidance on the scope of the term “realty sold” used to define transactions subject to the tax. Still, given that Part 6.7 and existing California caselaw clearly allow these particular exemptions, we anticipate that these exemptions also apply to the imposition of transfer tax under Measure ULA.

2.  On December 21, 2022, the Howard Jarvis Taxpayers Association and the Apartment Association of Greater Los Angeles filed a complaint in the Los Angeles County Superior Court requesting the Court to invalidate Measure ULA. Plaintiffs argue that the electorate cannot pass a special transfer tax dedicated to fund special purposes (i.e., homelessness prevention) rather than the general fund because governmental entities lack the power to do so under section 4 of Article XIII A of the California Constitution, and under section 450 of the Los Angeles City Charter, the electorate can only propose ordinances that the Los Angeles City Council itself may propose. Furthermore, on January 6, 2023, the owners of an apartment complex and trust filed a complaint in the U.S. District Court, Central District of California alleging that the tax imposed by Measure ULA violates the Equal Protection Clause of the U.S. Constitution.

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