As the clock ticks towards April, Los Angeles’ elite realtors are scrambling to unload luxurious homes before the impending “mansion tax” takes effect. According to FOX 11, approved by voters in November, this new tax adds a 4% levy on home sales between $5 million and $10 million and a 5.5% tax on sales above $10 million. The real estate market has become a high-stakes race, with realtors and sellers alike employing creative strategies to close deals before the deadline.
The pressure is palpable, as evidenced by star realtor Josh Altman’s recent appearance on Varney & Co. Altman, in a bold move, is offering a million-dollar bonus to any agent who can secure a sale for a $28 million Bel Air mansion by April 1. But he’s not the only one pulling out all the stops. KTLA reports that some sellers are even throwing in luxury cars, such as McLarens and Bentleys, as incentives for buyers to close deals before the tax kicks in. A Los Angeles Times article highlights a $16.5-million listing offering the buyer their choice of an Aston Martin Vantage, Aston Martin DBX 707, McLaren GT, or Bentley Bentayga EWB if they pay full price and close escrow before April 1.
With the funds from the mansion tax earmarked for building affordable housing for people experiencing homelessness, the measure has sparked debate among city officials and residents. Critics like Kerry Ann Sullivan of Pardee Properties question the efficiency of existing programs, suggesting that the focus should be on improving them rather than implementing new taxes. “There are a lot more solutions than taxing people because there’s already money and programs out there,” Sullivan told KTLA.
The city’s growing homeless population has amplified the urgency to find alternative housing solutions. Los Angeles faces a significant challenge in addressing the needs of its most vulnerable residents, and the mansion tax has emerged as one potential source of funding for desperately needed affordable housing projects.
The mansion tax, officially known as “Measure ULA,” has also faced legal challenges. As reported by FOX 11, in December, lawyers representing the Howard Jarvis Taxpayers Association and the Apartment Association of Greater Los Angeles filed a lawsuit to block the tax, arguing that it violates the state constitution. Stuart Varney, the host of Varney & Co., has pointed out the city’s previous struggles with building affordable housing. In 2016, Los Angeles raised $1.6 billion through a bond issue to construct 12,000 units but managed to complete only around 4,000, with costs skyrocketing to $800,000 per “affordable” unit.
As the mansion tax looms, it remains to be seen whether this controversial measure will prove effective in addressing Los Angeles’ housing crisis. In the meantime, elite realtors are leaving no stone unturned in their pursuit of last-minute sales, a testament to the high stakes and urgency of the current market. The coming weeks will reveal whether their efforts have paid off and whether the city’s new tax strategy can deliver on its promise of affordable housing. The clock is ticking, and all eyes are on the City of Angels as it grapples with this contentious issue, seeking a balance between luxury and necessity in a rapidly changing landscape.