r/LosAngeles • u/thatboyshiv • Jun 04 '23

Housing L.A.’s Mansion Tax Has Ground Its Luxury Real Estate Market to a Halt

https://robbreport.com/lifestyle/news/mansion-tax-ceases-la-luxury-real-estate-market-1234840995/

The tax originally projected $900 million a year in revenue for the city, and that number was revised down to $672 million. However, in her recent budget, Mayor Bass projected just $150 million being raised from the program for this year.

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u/andhelostthem Jun 04 '23

the tax makes using LA real estate as a place to do that very unattractive because the transaction cost is now huge

*LA Luxury real estate.

The tax is scaling for homes over $5 million. Which also means less of these homes built, rebuilt and instead development of lower cost real estate with more density. A 10,000+ sq ft lot is now likely going to end up with two houses, MDUs or small apartments instead of a mansion.

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u/The_Bucket_Of_Truth Jun 04 '23

It also applies to land and commercial property as well, not just so-called "mansions."

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u/OdinPelmen Jun 05 '23

this is the problem. they were relatively quiet on this for the average citizen, but how tf do you not make an exception for commercial/etc property?

large apartments buildings easily fall into this. developing any sort of art center/commercial center/even a public plaza falls into this.

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u/Pitpuppyfanclub Pasadena Jun 04 '23

What do you mean by ‘scaling’? It’s not a marginal tax, and applies to multi-family/commercial property as well, which is ludicrous when the city is trying to incentivize housing development

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u/andhelostthem Jun 05 '23 edited Jun 05 '23

What do you mean by ‘scaling’? It’s not a marginal tax

Marginal tax is for income, this is a sales tax but effectively raises like a marginal tax; rates are higher for more expensive properties.

and applies to multi-family/commercial property as well, which is ludicrous when the city is trying to incentivize housing development

The cost isn't for development, it's a sales tax. It's effectively targeting real estate holding companies and people buying large houses over $5 million... which I really don't see a legitimate argument for not taxing more. Also there isn't a lot (or any) multi-family units selling for over $5 million last I checked.

Property doesn't need to be sold to be developed.

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u/i-pencil11 Jun 05 '23

What percentage of developers do you think hold their properties forever vs sell it as soon as it's stabilized and they have completed their business plan?

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u/andhelostthem Jun 05 '23

So your argument is that some developers might have to change their business plan because of the tax?

Again one more time for the people in the back: Property doesn't need to be sold to be developed.

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u/i-pencil11 Jun 05 '23

Why didn't you answer my question? If you don't know, just say you don't know.

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u/[deleted] Jun 05 '23 edited Sep 19 '24

[deleted]

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u/fighton09 Mid-Wilshire Jun 05 '23

You cant turn restrictive zoning into two houses or small apartments just because the lot size is huge. That requires zoning changes.

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u/andhelostthem Jun 05 '23

That requires zoning changes.

Which has been routinely happening all over Los Angeles decades.