In recent months, sprawling properties belonging to celebrities such as Jim Carrey, Britney Spears, and Kylie Jenner have been put up for sale. Several major Hollywood celebrities are in a hurry to sell their ultra-luxury apartments before the commencement of Los Angeles new mansion tax on April 1. Notable personalities such as Jim Carrey, Britney Spears, and Kylie Jenner have already listed their sprawling properties for sale in recent months.
In February, Jim Carrey listed his 12,700 square feet home for $29 million, while Britney Spears put her 11,650 square foot home in Calabasas on the market for $12 million. At the same time, Kylie Jenner listed her Beverly Hills home for over $33 million. As the deadline for the new tax approaches, these celebrities are competing to secure profits and finalize sales before the tax comes into effect.
Explain the meaning of the term Mansion Tax
As per the Independent, the newly implemented tax, known as Measure ULA, applies to high-value properties and mandates a four per cent transfer tax for properties worth over US $5 million, and a 5.5 per cent tax for properties worth over $10 million. Additionally, this tax is in addition to the city’s existing 0.45% transfer tax, and it is the seller who is responsible for paying it.
CNBC reports that the tax is based on the sale price, not the profit, which implies that sellers will be liable to pay the tax even if they’re selling at a loss. To illustrate, one homeowner is willing to suffer a $6 million loss on their 16,700-square-foot house, solely to close the deal before the deadline.
According to the Los Angeles city website, the city plans to raise up to $1 billion through the sale of luxury apartments, and the resulting revenue will be directed towards public housing initiatives to tackle the homelessness crisis. The ULA tax was created to fund affordable housing projects and provide resources to tenants at risk of homelessness. As per data from the Los Angeles Homeless Services Authority, the number of homeless individuals in 2022 stood at around 42,000, compared to 28,000 in 2016. While some wealthy residents of Los Angeles have criticized the introduction of the tax, many civil liberty advocates view the bill as a constructive measure.