Measure ULA and Multifamily Sales Over $5M: What LA Apartment Owners Need to Know
Most people still call it the “mansion tax.” That nickname has cost LA apartment owners real money, because it suggests the tax targets luxury homes. It doesn’t. Measure ULA applies to apartment buildings, commercial property, and industrial buildings just as much as it applies to Beverly Crest estates.
If you own a multifamily property in the City of Los Angeles worth more than $5.3 million, this tax is likely the largest single line item in your eventual sale, larger than broker commission in many cases. And the assumption that a 1031 exchange protects you from it is both extremely common and completely wrong.
Here’s exactly how it works, what it costs, and how to plan around it. For the broader cost picture, see our breakdown of what it costs to sell an apartment building in LA.
What Measure ULA Actually Is
Measure ULA, formally the Homelessness and Housing Solutions Tax, was approved by Los Angeles voters in November 2022 and took effect April 1, 2023. It’s a documentary transfer tax on real property transfers within the City of Los Angeles, dedicated to funding affordable housing and homelessness prevention.
Two features distinguish it from an ordinary property tax:
- It’s assessed on the entire consideration or value of the property, not on the gain and not on an assessed value.
- It’s triggered by the transfer itself, not levied annually.
It sits on top of the existing 0.45% City of Los Angeles transfer tax and the 0.11% LA County documentary transfer tax.
Current Thresholds and Rates (2026)
The original thresholds were $5 million and $10 million. They adjust annually based on the Chained Consumer Price Index, which means the numbers you may have memorized are already out of date.
As of July 1, 2025, and still in effect through 2026:
Sale Price | ULA Rate | Tax Owed |
|---|---|---|
Below $5,300,000 | 0% | None |
$5,300,000 to $10,600,000 | 4% | $212,000 to $424,000 |
Above $10,600,000 | 5.5% | $583,000 and up |
Note what those numbers mean in practice. A building selling at exactly $5,300,000 owes $212,000. A building selling at $5,299,000 owes nothing.
The Cliff Effect: Why $1 Can Cost You $212,000
Measure ULA is not a graduated tax. There’s no bracket structure where only the amount above the threshold is taxed. Cross the line and the entire sale price is taxed at the applicable rate.
The math at the first threshold:
Sale Price | ULA Owed | Net After ULA |
|---|---|---|
$5,299,000 | $0 | $5,299,000 |
$5,300,000 | $212,000 | $5,088,000 |
You sell for $1,000 more and net $211,000 less.
The same effect occurs at $10.6 million, where the rate jumps from 4% to 5.5%. A sale at $10,600,000 owes $583,000, while a sale at $10,599,000 owes $423,960, a difference of roughly $159,000 for $1,000 in price.
This is why you see clustering of LA transactions just below the thresholds, and why pricing strategy near those lines deserves real analysis rather than a guess.
Why Your 1031 Exchange Doesn’t Help
This is the single most expensive misunderstanding among LA apartment sellers.
A 1031 exchange defers income tax: federal capital gains, California state income tax, and depreciation recapture. It works by treating your sale and reinvestment as a continuation of the same investment rather than a taxable disposition.
Measure ULA is not an income tax. It’s a transfer tax, triggered by the act of conveying the property. The transfer happens whether or not you reinvest the proceeds. So the tax is owed at closing, out of your proceeds, regardless of your exchange.
For the mechanics, deadlines, and requirements of an exchange, see our guide to California 1031 exchange rules.
Practical consequence: an owner selling a $9 million building and exchanging into a replacement property will pay $360,000 in ULA before the qualified intermediary ever receives the funds. That’s $360,000 less to reinvest, which means less buying power and often more debt on the replacement property.
If you’re planning an exchange near or above the threshold, model the ULA hit into your replacement property budget from day one.
Which Properties and Locations Are Covered
Geography is everything. Measure ULA applies only within City of Los Angeles boundaries. It does not apply in:
- Santa Monica, Beverly Hills, West Hollywood, Culver City
- Inglewood, Long Beach, Torrance, Gardena, El Segundo, Carson
- Pasadena, Glendale, Burbank
- Unincorporated Los Angeles County
Note that several of those cities have their own transfer taxes, so “no ULA” does not mean “no transfer tax.” Santa Monica and Culver City in particular have significant local transfer taxes of their own.
City boundaries in LA are notoriously irregular. Neighborhoods that feel like separate cities (Venice, San Pedro, Woodland Hills, Sylmar) are within the City of LA and fully subject to ULA. Confirm your parcel’s jurisdiction rather than assuming.
Property types covered: all of them. Single-family homes, condominiums, apartment buildings, commercial, industrial, and mixed-use. There is no multifamily carve-out.
Exemptions That Actually Exist
Exemptions are narrow and mostly unavailable to typical private owners. They break into three categories.
Based on the seller: – 501(c)(3) nonprofit entities – Community Land Trusts as defined in the LA Administrative Code – Limited-Equity Housing Cooperatives – Limited partnerships or LLCs whose general partners or managing members are bona fide nonprofits, Community Land Trusts, or Limited-Equity Housing Cooperatives – Additional exemptions under California Revenue and Taxation Code sections 11911 through 11930
Based on the purchaser: – 501(c)(3) nonprofits that received their IRS determination letter at least 10 years before the purchase and hold assets under $1 billion – The United States, or any federal, state, or local public agency
Based on the transaction: – Transfers deemed a gift – Properties where liens equal or exceed value with no additional money paid – Conveyances ordered by a bankruptcy court – Transfers between spouses or former spouses in a divorce settlement – Transfers into or out of a trust where beneficial ownership does not change – Deeds in lieu of foreclosure and actual foreclosures – Transfers between entities and individuals where proportional interest remains unchanged
In addition, the City Council approved a one-time, five-year exemption for Palisades fire survivors in 2026.
If you’re a private apartment owner selling to another private investor, none of these will apply to you.
Legal Mitigation, and What Crosses the Line
Legitimate planning:
- Price below the threshold. If your building appraises near $5.4 million, pricing at $5.29 million may net you more than pricing at $5.4 million. Run the math.
- Sell portfolio assets separately. If you own multiple buildings, individual sales that each fall below the threshold avoid ULA where a bulk sale would trigger it. This works only if the properties are genuinely separate assets sold in genuinely separate transactions.
- Time your sale. Thresholds adjust annually with CPI. A sale in a later year faces a slightly higher threshold.
- Consider selling outside city limits first if you hold a portfolio spanning jurisdictions and want to sequence dispositions.
- Structure a long-term hold. ULA is a transfer tax. No transfer, no tax. Holding until death gives heirs a stepped-up basis and defers the question.
What invites scrutiny:
- Splitting a single property into artificial parcels or transactions to stay under the threshold
- Sham entity transfers designed to disguise a change in beneficial ownership
- Allocating an artificially low price to real property and an inflated price to personal property or goodwill
The City’s Director of Finance continues to issue implementation rules, and the city has an interest in policing avoidance. Legitimate pricing decisions are fine. Contrived structures are not, and the cost of being wrong exceeds the tax.
Work with a CPA and a real estate attorney before executing anything clever.
What ULA Has Done to the LA Multifamily Market
The market effects are now well documented, and they matter to you as a seller because they shape your buyer pool.
Revenue. Through April 30, 2026, Measure ULA raised nearly $1.2 billion across 1,633 transactions, according to the LA Housing Department. That’s meaningful revenue, though well short of the $600 million to $1.1 billion annually projected on the 2022 ballot.
Transaction volume. Research from the UCLA Lewis Center estimates the odds of a property selling above the $5 million threshold fell by as much as 55% after ULA took effect. Sellers near the threshold are simply choosing not to transact.
Investment climate. CoStar data indicated that at the start of 2026, more than 1,000 active LA listings sat within or near the ULA thresholds. The commercial real estate community argues the tax has chilled institutional investment and multifamily development, while supporters point to the housing funded by the revenue.
For broader context on where the market sits, see our LA commercial real estate investment outlook.
What this means for you: fewer comparable sales, a thinner buyer pool above the threshold, and buyers who price ULA into their offers. Some buyers avoid ULA-triggering deals entirely.
Reform Efforts: Where Things Stand in 2026
Anyone waiting for relief should understand the current state of play, because the last year has produced a lot of headlines and very little change.
- January 27, 2026: The City Council declined to move a proposed ULA “rewrite” to the June 2026 ballot. The proposal had included a 15-year exemption for new construction and hardship relief for Palisades wildfire victims.
- June 2026: A statewide initiative from the Howard Jarvis Taxpayers Association, which would have capped transfer taxes at 0.11% statewide, collapsed in a deal at the state capital. Lawmakers instead placed a constitutional amendment on the November ballot raising the approval threshold for future special taxes to two-thirds, while explicitly leaving already-enacted taxes like ULA alone.
- July 1, 2026: The City Council voted unanimously to shelve a ballot measure that would have exempted multifamily properties built in the last 10 years from ULA. There will be no ULA reform measure on the November 2026 ballot.
- Also July 1, 2026: The Council directed the LA Housing Department to prepare an ordinance for a pilot tax credit program that would reduce the ULA rate to 1.5% for certain residential projects that include affordable housing and use prevailing wage labor. This is a developer-focused program, not general relief for existing building owners.
Bottom line for sellers: Measure ULA remains fully in effect with no expiration date. Planning your sale around the tax as it exists today is the only sound approach. Do not delay a sale waiting for reform.
Planning Your Sale Around the Thresholds
A practical sequence:
- Get an accurate valuation first. You cannot plan around a threshold until you know which side of it your building sits on. Our guide on valuing your apartment building walks through the methods.
- If you’re clearly below $5.3 million, ULA is not a factor. Focus on the rest of your cost structure.
- If you’re within roughly 10% of the threshold, model both scenarios explicitly: price below the line versus price above it and absorb the tax. Include the effect on your buyer pool, not just the arithmetic.
- If you’re clearly above the threshold, build the ULA into your net proceeds from the start, and if you’re exchanging, into your replacement property budget.
- If you’re near $10.6 million, run the same analysis at the second threshold, where the marginal cost of crossing is about $159,000.
- Confirm your parcel is actually in the City of LA. This takes five minutes and occasionally saves a fortune.
Common Mistakes
Assuming a 1031 exchange covers it. It doesn’t. This is the most expensive assumption in the LA market.
Using outdated thresholds. The $5 million and $10 million figures are from 2023. The current numbers are $5.3 million and $10.6 million, and they move annually.
Treating it like a graduated bracket. It applies to the full sale price, not just the amount above the threshold.
Assuming “mansion tax” means it doesn’t apply to apartments. It applies to every property type.
Not weighing the alternative. If ULA makes a sale expensive, compare it against refinancing instead of selling.
Waiting for reform. Three consecutive reform efforts have failed or been shelved. There is no measure on the November 2026 ballot.
Ignoring the effect on your buyer pool. Above the threshold, some buyers simply won’t engage, which affects marketing strategy as much as pricing.
Frequently Asked Questions
What is Measure ULA?
A transfer tax approved by LA voters in November 2022 and effective April 1, 2023, funding affordable housing and homelessness prevention. It applies to property transfers within the City of Los Angeles at 4% for sales from $5.3 million to $10.6 million and 5.5% above $10.6 million.
Does Measure ULA apply to apartment buildings?
Yes. Despite the “mansion tax” nickname, it applies to all property types including multifamily, commercial, industrial, and mixed-use.
Is there a 1031 exemption from Measure ULA?
No. A 1031 exchange defers capital gains and depreciation recapture but does not affect the transfer tax, which is owed at closing regardless of reinvestment.
How much is ULA on a $6 million sale?
$240,000, calculated as 4% of the full $6 million sale price, assuming the property is within City of Los Angeles boundaries.
Does ULA apply outside LA city limits?
No. It applies only within City of Los Angeles boundaries. Properties in Santa Monica, Beverly Hills, Culver City, Inglewood, Long Beach, Pasadena, and unincorporated LA County are not subject to it, though some of those jurisdictions have their own transfer taxes.
Are there exemptions for affordable housing?
Some. Qualifying nonprofit sellers and purchasers, Community Land Trusts, and Limited-Equity Housing Cooperatives can be exempt. A pilot tax credit program reducing the rate to 1.5% for certain affordable residential projects using prevailing wage was directed for drafting in July 2026, but it targets developers rather than existing owners.
Can I structure around Measure ULA legally?
You can price below a threshold, sell portfolio properties as genuinely separate transactions, or hold rather than sell. What you cannot do is create artificial parcel splits or sham entity transfers. Consult a CPA and real estate attorney before executing any structure.
Has ULA reduced apartment sales in LA?
Yes. UCLA Lewis Center research estimates the odds of a property selling above the $5 million threshold fell by as much as 55%. Transaction volume above the threshold has declined substantially.
Who pays Measure ULA, the buyer or the seller?
By custom and in most LA purchase agreements, the seller pays. It is negotiable in principle, but the market convention is seller-paid, and buyers price accordingly.
Should I price under $5.3 million to avoid it?
Sometimes, yes. Pricing at $5.29 million instead of $5.4 million gives up $110,000 in price to save $216,000 in tax. Near the threshold, run the math explicitly with your broker rather than defaulting to the higher list price.
Will Measure ULA be repealed or reformed?
Not in the near term. Reform efforts in January 2026, June 2026, and July 2026 all failed or were shelved, and there is no ULA measure on the November 2026 ballot. The tax has no expiration date.
Get a Valuation That Accounts for ULA
If your building is anywhere near $5.3 million, the difference between a well-planned sale and a poorly planned one is measured in hundreds of thousands of dollars, and the planning has to happen before you go to market.
For the full selling process start to finish, see our main guide on how to sell your apartment building in Los Angeles. A proper Broker Opinion of Value for a City of LA apartment building should show you where you sit relative to the thresholds, model both sides of the line where relevant, and give you a net proceeds figure that includes ULA rather than pretending it away.
