Los Angeles ‘Mansion Tax’ Update Regarding Office of Finance Assessments

Taxpayer disputes involving Los Angeles’s Measure ULA, the Homelessness and Housing Solutions Tax—commonly referred to as the “mansion tax”—are progressing through the city’s administrative review process. Property owners facing assessments under the tax should be aware of the procedural steps for challenging those assessments, as well as recent legal developments that may affect how the tax is interpreted and enforced. 

As discussed in our previous LawFlash, the City of Los Angeles enacted Measure ULA, the Homelessness and Housing Solutions Tax, effective April 1, 2023. The “mansion tax” is imposed on “each deed, instrument or writing” where the “consideration or value” exceeds $5 million.[1]

Since enactment of the tax, the City of Los Angeles Office of Finance (the City) has been aggressive in seeking to impose the tax on real estate transactions that are often outside the scope of the ordinance based on the plain language in the ordinance. For example, where there are separate sales of separate real estate interests, such as tenancy-in-common (TIC) interests, in the same property by different sellers on separate deeds (often with separate purchase agreements for each seller’s respective interest), the City has been seeking to assess the “mansion tax” on the transaction after it has closed. While the ordinance provides that the tax is imposed on each deed, the City has nevertheless applied the threshold for imposition of the tax and computed the tax based on the combined purchase prices of the separate sales.

Typically, the City audits taxpayers by sending information requests regarding transactions that have closed. The City then issues an assessment, which the taxpayer can appeal within 45 days to a City Assessment Review Officer (ARO). The City and the taxpayer are each required to submit a position paper at least 30 days prior to the hearing, and the City and taxpayer both present their positions at the hearing. In our experience, the City has provided limited explanation for its position to refute the plain language of the ordinance, which, as discussed above, provides that the tax is only imposed on each deed where the consideration or value conveyed by such deed exceeds $5 million.

The ARO is supposed to issue a decision within 90 days, although often it takes at least four months for a taxpayer to receive a decision. ARO decisions have upheld the imposition of the tax without any substantive articulation of the basis for imposing the tax under the ordinance. In other words, the ARO appears to be ignoring the plain language in the ordinance in an effort to require taxpayers to pay the tax, regardless of whether this position is supported by the actual language in the ordinance.

If the taxpayer does not receive a favorable decision from the ARO, the taxpayer may appeal the decision within 45 days to the City’s Board of Review (the Board). The taxpayer could also appeal directly to the California Superior Court instead of the Board.

At either the ARO or Board level, prior to a decision by the Board, the taxpayer can also choose to apply to the City’s Settlement Bureau to seek to resolve the case through settlement.

The Board is composed of City staff members and members of the public, including members of the business community. The taxpayer has the opportunity to provide supplemental evidence and arguments in advance of the Board hearing, and the Board decides by majority vote. While we believe that each deed is required to be treated separately under the ordinance, many of these cases are still working their way through the administrative process and are expected to be heard soon by the Board.

Separately, ongoing litigation seeks to overturn Measure ULA. In Howard Jarvis Taxpayers Ass’n et al. v. City of Los Angeles,[2]  appellants seek to invalidate Measure ULA on the basis that the tax violates article XIII A of the California Constitution, which requires that (1) special taxes be adopted by a two-thirds vote and (2) cities may not impose a transaction or sales tax on the sale of real property. The Los Angeles County Superior Court held that this limitation does not apply to citizen initiatives, and the appellants seek to overturn the trial court’s decision. The appeal is fully briefed and is pending oral argument before California’s Fourth Appellate District Court.

In March 2025, following the January wildfires in Los Angeles, Los Angeles Mayor Karen Bass raised the possibility of a temporary suspension of Measure ULA; however, no formal action was taken.

In April 2025, a study published by the University of California, Los Angeles (UCLA) Lewis Center for Regional Policy Studies reported that Measure ULA has been associated with a reduction in higher-end real estate transactions in Los Angeles. According to the UCLA study, Measure ULA may also affect activity in the commercial, industrial, and multifamily sectors, potentially impacting the City’s ability to build new housing, revitalize commercial and industrial properties, and raise property tax revenue (which is generally limited to changes in ownership under Proposition 13).

Taxpayers receiving assessments under the tax may wish to evaluate their options under the City’s administrative procedures and should also continue to monitor the litigation and political development for updates.