Here's Why The O Group Agents Keep Talking About That 'LA Mansion Tax'
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Selling Sunset season 7 once again introduces viewers to some of Los Angeles' hottest real estate finds as the Oppenheim Group agents vie for sales and big commission checks. But this season, there's one term that keeps coming up when they're chatting about the real estate market—something that seems to cause Jason and Brett a lot of stress: the so-called “LA mansion tax."
Jason even suggested that Emma Hernan ask her client-slash-former love interest for a whopping 30 percent reduction on his asking price in order to try to sell a home he built before the tax kicked in during the spring of 2023.
But what is the mansion tax and why is everyone on the show freaking out over it? Here’s what to know.
What is the LA mansion tax?
The so-called "mansion tax" has an official name: the Homelessness and Housing Solutions Tax or United to House LA (ULA) measure, and it’s a tax that focuses on properties that are valued at over $5 million.
The purpose of the tax, according to United to House LA, is to reduce homelessness, making housing more affordable and providing financial assistance to low-income seniors who are at risk of becoming homeless. Specifically, the National Law Review says that it "established the House LA Fund to collect the special tax revenue, and allocate funds to the designated projects, and prevent homelessness." The article goes on to claim that ULA was "originally estimated to generate between $600 million and $1.1 billion annually to fund affordable housing projects, provide tenant aid, and support projects preventing homelessness."
However, the tax has been controversial—opponents say that it discourages development in Los Angeles and pushes people to cities without the tax, like Beverly Hills, West Hollywood, and Santa Monica, per The Los Angeles Times.
When did it go into effect?
The tax went into effect on April 1, 2023, according to the city of Los Angeles. Filming for Selling Sunset season 7 occurs right around the time it's set to take effect, from the start of the year to around mid-March of 2023.
Who pays the mansion tax?
This is a real estate tax that is paid by homeowners and developers. It puts a 4 percent charge on all residential and commercial real estate sales in Los Angeles valued above $5 million, and a 5.5 percent charge on sales above $10 million, per the city of Los Angeles. (The city has a handy calculator that can help you see just how much extra money you’ll need to dish out with this tax if you can afford to sell a home in this price range.)
Why do the agents keep talking about this tax on Selling Sunset?
Jason and Brett Oppenheim are totally stressed out about this new tax system, and it makes sense if you look at their clientele and the properties they're trying to sell. Many O Group clients either sell or want to buy homes in the $5 million+ range, and 4 to 5.5 percent tax on a property runs, at the minimum, $200,000.
Has it impacted the real estate market?
It's not totally clear. Jason says on the show that some real estate brokerages are laying off workers right now, and cites the tax and slowing real estate market as reasons, but these claims can't be verified or proven.
The real estate market sped up before the tax began on April 1, but then “chilled” the market “immediately” after it went into effect, per The Hollywood Reporter.
The tax has been the subject of two lawsuits, per The Hollywood Reporter. One was filed by the Howard Jarvis Taxpayers Association and another two suits were filed at the state and federal level by a group of property owners. The group's federal suit has since been dismissed by a judge, and their state-level one was consolidated with the Howard Jarvis case, per a press release from Public Counsel. That one, too, was dismissed.
Both dismissals in the state lawsuit and federal lawsuit are reportedly being appealed.
You can hear the agents talk all about this new tax and their thoughts on it during this new season of Selling Sunset, streaming now on Netflix.
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