Lawsuit Filed to Halt L.A.’s Mansion Tax

“A coalition of real estate and antitax groups is seeking to prevent the city of Los Angeles from implementing a recently passed tax on the sales of properties over $5 million,” reports Benjamin Oreskes for the Los Angeles Times.

YIMBYs and developers have criticized the mansion tax since it was approved by Measure ULA with 57 percent of the vote in the city of Los Angeles on the November 2022 ballot. Despite the taxes intentions to raise funds for the construction of affordable housing, critics say the tax will have the effect of disincentivizing development. City officials disagree, estimating that the tax on the transfer of properties “could bring in between $600 million to $1.1 billion a year,” according to Oreskes.

“In a lawsuit filed Wednesday, lawyers representing the Howard Jarvis Taxpayers Assn. and the Apartment Assn. of Greater Los Angeles argue that the documentary transfer tax, which is slated to go into effect in April, violates the California Constitution,” reports Oreskes. The lawsuit asks for Measure ULA to be invalidated.

The Howard Jarvis Taxpayers Association achieved infamy by backing Proposition 13 in 1978, one of the most infamous ballot initiatives in California history, with massive and numerous effects for planning and development to this day.

“The groups’ attorneys argue that ‘great and irreparable harm will result to plaintiffs, and to all Los Angeles property owners in being required to pay unconstitutionally imposed taxes.’”

Los Angeles isn’t the only expensive city to consider a mansion tax in recent years. State legislators in Massachusetts are considering a similar transfer tax for expensive homes and New York implemented a ‘mansion tax’ in 2019.

More details on Measure ULA and the lawsuit are included below.