Posted on 05/09/2023 1:57:38 PM PDT by grundle
Rising interest rates have put a chill on real estate sales across the country, but an added factor has put the freeze on the Los Angeles luxury housing market.
Last fall L.A. voters approved a measure known as the “mansion tax” (formally referred to as United for Housing L.A. or ULA) to “fund affordable housing projects and provide resources to tenants at risk of homelessness,” according to the Los Angeles Office of Finance. Ever since it went into effect luxury home sales have stalled out in the city.
Starting on April 1, the measure instituted a 5.5 percent charge on commercial and residential sales above $10 million and 4 percent on properties over $5 million. Homeowners raced to sell properties before the policy began—slashing prices and luring potential owners with bonuses and even exotic cars to move the houses before March was done, according to the Los Angeles Times.
Once April 1 hit, many luxury properties were yanked off the market and the ones still on the market have skyrocketed in price to account for the transfer tax. In March, 126 homes priced above $5 million sold, but since then that number of has plummeted. The two, in Brentwood and Venice, sold for $5.7 million and $7.5 million, which raised over half of a million dollars for the homelessness prevention program.
Many luxury homeowners are holding on to their properties as the wait out two lawsuits against the city that hope to get ULA thrown out. Other sellers are trying to find loopholes in the measure, including selling a single property as smaller, cheaper properties. While some are taking the broker’s fee out of the sale price so it falls below the threshold.
While this tax originally projected $900 million a year in revenue a year for the city, based on 2021 and 2022 sales data, those estimates have been revised down to $672 million. But for now, Mayor Karen Bass is hedging her bets, putting forward a city budget that only projects $150 million from the program.
Yacht tax? People buy fewer yachts - yacht builders go out of business, fewer employees paying taxes, all equaling a net loss.
Mansion tax? Fewer people buy mansions - real estate brokers, home maintenance people (who would have been fixing up those mansions for sale) all get less work, ergo fewer employees paying taxes, all equaling a net loss.
Leftists will never understand, 'cause THEY ARE STUPID!
Cause and effect. Simple common sense.
Tax something too much, you get less of it.
Tax someone too much, he/she will find away out of the high-tax location.
But, common sense is beyond democrats’ comprehension capabilities.
If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.
Yeah, but they stuck it too the rich. /s
Create a shared ownership property, with the number of shares equal to the desired full-property sale price divided by $4.999M. One person buys all the shares under separate contracts (?).
Their used to be a how about brokers selling multi million dollar homes in the LA area, I just can’t remember the name.
Now, “On this episode multi million dollar real estate agents, Steve sits at his desk, waiting for the phone to ring and refreshing his Inbox, while Suzie the owner looks over financials to decide which agents to lay off. Will this be Steve’s last day?”
1031 swaps. No sale, so no tax.
All of what you posted is true.
The funny thing is, one can assume in CA most of the mansion buyers and sellers would be leftists, so if they really believed their own BS would be happy to pay the tax.
They have the nerve to call repubs "greedy".
‘to “fund affordable housing projects and provide resources to tenants at risk of homelessness,”’
Obviously the rich are using not selling their homes as a loophole to unfairly punish homeless people. So LA needs to pass a new law that says, if a mansion is not actively inhabited for a period of more than, say, two weeks, the city can seize it and turn it into a homeless shelter. Close that loophole!
Well, in the move “I Love You Man”, one guy plays an LA realtor trying to sell Lou Ferigno’s mansion. The other guy plays a deadbeat who goes to high end open houses just to mooch off the free appetizers.
https://therealdeal.com/la/2023/04/04/ocean-west-sells-hollywood-office-building-at-60-loss/
There are entire areas throughout the Rust Belt where owners couldn't afford to sell at a loss. The cities and town needed to be bulldozed decades ago but linger on.
Any property of value in Blue States that is not already owned by an LLC will be, and won't be sold ever again. The property owner will never change but the stock holders will. I expect most, if not all of them, will be incorporated as non-profits like the Black Lives MatterTM properties.
But it’s more important how I feel.
There was a great real-estate columnist named Robert Bruss who I read every Sunday and I purchased a bunch of his white papers who had unique ways to sell real estate. When real estate interest rates were high, he told sellers to consider rent to buy where a percentage of the rent went towards the purchase. I suspect if he were alive today, he would be recommending sellers do this.
It may be that sellers are doing this but it’s not registering as a sale because the seller is still in control of the property.
You’d think there would have been lessons learned from Bush 41’s yacht tax.
Remember when they raised taxes on luxury boats.......................
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