In mid-July, a 1926 English manor at 344 South Hudson Avenue in Hancock Park went into contract asking $16.5 million. It had been on the market less than a month. The deal topped every residential contract signed in Los Angeles County that week, according to a report compiled by Douglas Elliman's Eklund Gomes team, with listing credit to Christie's International Real Estate Southern California's Aaron Kirman and Sotheby's International Realty's Neyshia Go. On paper, the seller absorbed a 5.5 percent transfer tax on the full sale price under Measure ULA, a bill north of $900,000, and the property still moved in under four weeks.
That deal tells a real story about the top of the Los Angeles luxury market. But it is not the story that matters most for owners sitting a few million dollars lower, in the $5 million to $8 million band where Brentwood, Encino, Hollywood Hills, and Los Feliz sellers actually live. There, a quieter shift is underway. According to The Real Deal's July 26 reporting, luxury remodel permits inside the City of Los Angeles are up 46 percent since Measure ULA took effect. Owners near the threshold are choosing to renovate rather than sell and hand over a six-figure check at closing. That is the piece of this story most guides to the mansion tax skip entirely, and it is the piece that should actually change how a seller in this range thinks about 2026.
The Line Nobody Draws on a Map
Measure ULA is a City of Los Angeles transfer tax, not a Los Angeles County or metro-area tax. That distinction sounds bureaucratic until you notice where the boundary actually falls. Beverly Hills, Santa Monica, and West Hollywood are each their own incorporated cities, so a sale in any of them owes nothing under Measure ULA no matter the price. Brentwood, Encino, Hollywood Hills, and Los Feliz sit entirely inside the City of Los Angeles, so every qualifying sale in those neighborhoods is exposed to the tax.
Two homes with identical square footage, identical finishes, and identical asking prices can face a six-figure difference in seller cost purely because of which side of an invisible municipal line they sit on. A $7 million sale in Beverly Hills owes zero transfer tax beyond the standard county rate. The same $7 million sale in Brentwood or Los Feliz owes $280,000 to the city before escrow closes anything else. That is not a design flaw voters debated in 2022. It is a jurisdictional accident that happens to track almost exactly with some of the most desirable addresses on the Westside and in the hills.
What the Tax Actually Costs at Each Price Point
The thresholds reset every July 1 based on the Chained Consumer Price Index. As of July 1, 2026, the two tiers moved to $5.4 million and $10.9 million, up from $5.3 million and $10.6 million the year before. The tax applies to the entire sale price once a deal crosses a line, not just the amount above it, which is where sellers get surprised.
| Sale Price | Tier | ULA Tax Owed |
|---|---|---|
| $5,000,000 | Below threshold | $0 |
| $5,400,000 | 4% begins | $216,000 |
| $8,000,000 | 4% | $320,000 |
| $10,900,000 | 5.5% begins | $599,500 |
| $16,500,000 | 5.5% | $907,500 |
| $20,000,000 | 5.5% | $1,100,000 |
The cliff is the part that catches people off guard. A home that sells for $5,399,000 owes nothing. The same home at $5,401,000 owes $216,040. A two thousand dollar difference in sale price creates a six-figure difference in what the seller walks away with, and that math has quietly become part of how listing agents set an asking price near the line.
Why Remodel Permits Are Up 46 Percent
The 46 percent increase in luxury remodel permits since Measure ULA took effect is not a coincidence and it is not evenly distributed. It clusters in the price band where the tax bill and the cost of a serious renovation start to look comparable. A homeowner in Los Feliz or Hollywood Hills sitting on a property worth $6 million has to weigh a roughly $240,000 transfer tax against the cost of a kitchen and primary suite remodel that might add comparable value without ever triggering a sale. For owners who were on the fence about staying anyway, that math has tipped a meaningful number of them toward staying and building instead of listing.
This has a second-order effect that rarely makes it into ULA explainers. Every owner who renovates instead of sells is a listing that does not hit the market. In neighborhoods where inventory in the $5 million to $8 million range was already tight, this quietly restricts what move-up buyers have to choose from. It also means the properties that do come to market in this band tend to be owned by sellers who have already decided the tax is worth paying, whether because of a relocation, an estate situation, or simple readiness to move on. That changes the negotiating posture on both sides of a deal more than most people account for.
What the Political Fight Actually Changed (and Didn't)
Measure ULA has survived three separate legal challenges. The most significant came on December 15, 2025, when the California Court of Appeal upheld the tax against a challenge from the Howard Jarvis Taxpayers Association, affirming that Los Angeles voters had the authority to enact the transfer tax through a citizen initiative. That ruling closed the most direct legal path to overturning the measure.
On the legislative side, the reform efforts have mostly stalled. Los Angeles City Council rejected a proposal from Councilmember Nithya Raman that would have exempted new multifamily construction from the tax, and on July 6, 2026, the council formally killed a related ballot measure rather than send it to voters. The council instead directed city staff to draft a pilot tax credit program for certain multifamily projects, which as of this writing has not been finalized.
The Howard Jarvis Taxpayers Association had also qualified a statewide initiative for the November 2026 ballot that would have capped local transfer taxes. In late June 2026 the association withdrew that measure after reaching a deal with Sacramento, and the substitute, Proposition 43, will appear on the November ballot instead. Proposition 43 would raise the vote threshold for future local special taxes to two-thirds, but it applies only prospectively. It would not touch Measure ULA or any existing tax. For a seller weighing whether to wait out the political process, the practical takeaway is straightforward: nothing on the near-term horizon changes what a 2026 sale owes.
The Levers Sellers Actually Have
None of this means a seller near the threshold is stuck. A few approaches show up repeatedly in how experienced Westside and hillside agents structure these deals.
- Pricing a listing just under a threshold, even if it means leaving some equity on the table at the sale, can still net more than pricing above the line and paying the tax on the full amount.
- Some buyers in competitive segments will structure a credit toward the ULA bill as part of their offer. A buyer offering $6.2 million with a $240,000 credit toward the tax effectively nets the same as a $6.44 million offer without one, which matters when comparing offers that look different on paper but land close in practice.
- Off-market sales have grown more common among sellers above the thresholds. Going off-market does not remove the ULA obligation once a price crosses the line, but it gives a seller more control over timing and terms, which matters when the tax bill is already fixed.
- The 1031 exchange does not defer Measure ULA. It is a transfer tax, not a capital gains tax, so exchanging into a replacement property does not shield a seller from what is owed at closing on the sale side.
Frequently Asked Questions
Does Measure ULA apply to my Brentwood or Los Feliz home if I sell for less than $5.4 million? No. The tax only applies once a sale crosses the threshold in effect at closing. A sale at $5.39 million owes nothing under Measure ULA.
Is Beverly Hills real estate exempt from the mansion tax? Yes. Beverly Hills, Santa Monica, and West Hollywood are separate incorporated cities and fall outside City of Los Angeles tax authority, so Measure ULA does not apply to sales there regardless of price.
What happens if my sale price lands exactly on the threshold? The tax applies at and above the threshold, calculated on the full gross sale price. There is no partial or marginal calculation, which is why pricing strategy just below a line often protects more equity than pricing just above it.
Can I defer Measure ULA with a 1031 exchange? No. Measure ULA is a transfer tax assessed on the gross sale price, not a capital gains tax, so a 1031 exchange does not defer or reduce the obligation.
If you own a home in Brentwood, Encino, Hollywood Hills, or Los Feliz and you are trying to figure out whether 2026 is the year to sell, renovate, or wait, the math is specific to your address and your price point. Antonio Bruno can walk through the net proceeds on your particular property, model where you sit relative to the current thresholds, and build a pricing strategy before you commit to a list date. Schedule a private consultation to get the numbers right from the start.
