Los Angeles voters were told they were taxing mansions owned by millionaires and billionaires. What they actually approved was a tax on real-estate transactions — and the city’s housing supply is paying the price.
The measure, known as ULA, was sold to voters with projections that it could help produce more than 26,000 affordable homes over a decade. In practice, it applies a 4% tax to qualifying property sales above $5.4 million and a 5.5% tax to sales of $10.9 million or more, stacked on top of the city’s existing transfer tax. Those thresholds rise automatically with inflation.
The tax doesn’t just hit the amount above the threshold — it hits the entire sale price once a property crosses the line. Sell a property for just over $5.4 million, and the ULA tax alone can exceed $216,000.
That structure doesn’t just touch mansions. It hits apartment buildings, commercial property, and development sites — the exact transactions that drive new housing construction.
Transactions Collapsed
Researchers Michael Manville of UCLA and Mott Smith of USC estimate that after ULA took effect, the odds of a Los Angeles property selling above the tax threshold fell by as much as 50%. Their strongest findings showed transactions involving commercial, industrial and multifamily properties dropped an estimated 30% to 50%.
A 2026 econometric analysis cited by UCLA estimates ULA cut permitting for multifamily projects of 20 units or more by 31% — a loss of roughly 1,900 housing units a year.
A tax designed to fund more housing is now estimated to be producing less of it.
The mechanism isn’t complicated. New housing gets built because investors believe that after buying land, securing permits, paying fees and financing construction, there’s money to be made. Add another 4% or 5.5% tax to the transaction, and some of those deals stop making financial sense. Projects that would have gone forward don’t.
Even Existing Tax Revenue Takes a Hit
Because California properties are typically reassessed when ownership changes, Manville and Smith estimate ULA is reducing property-tax revenue to local governments by roughly $25 million annually — a loss that compounds over time. A new tax meant to raise money is suppressing the very activity that generates an existing one.
Where the Money Is Actually Going
Los Angeles recently authorized a record affordable-housing funding round, with hundreds of millions of dollars coming from ULA proceeds. But of the latest round, $55.5 million is going toward 3,713 existing affordable-housing units rather than new construction — including Skid Row properties where court records describe allegations of bedbugs, cockroaches, rats, sewage leaks and human waste.
That outcome is a long way from the campaign promise of tens of thousands of new affordable homes.
One developer summed up the situation to the New York Post in seven words:
