Here’s the Scariest Real Estate Tax I’ve Ever Seen
In this most recent November election, voters in the City of Los Angeles passed Ballot Measure ULA, which increases the tax to transfer the title on homes and properties, when they’re selling for more than $5 million. So when a property now sells for more than $5 million in the City of L.A., the total transfer tax to change the title over to the new buyer will now be 4.56% of the purchase price, and if the property sells for more than $10 million, this same transfer tax will now become 6.06% of the purchase price.
So, for example, if you sell a property for $10 million, the brokerage fee may be $300,000.00, but the transfer tax paid to the City, just for transferring the title over from the seller to the buyer, will now become more than $600,000.00!
In addition, if you sell a property for more than $17 million, you’ll now pay more than $1 million in transfer tax!
The idea behind all this is that the money is intended to be utilized to remedy the city’s homeless situation, which has definitely gotten much worse over the years, but will this, in fact, be where the money ends up being spent? Because when more tax dollars become available, it’s not uncommon for politicians to make the money available to powerful special interest groups, including to their biggest campaign donors instead. And as an example of this re-routing of our tax dollars, decades ago Californians were sold the idea of approving a new state lottery, and we were told that the money raised from it would then be going to fund education. But after the measure was passed, the politicians then whisked the money away into the state’s general fund, where the money can now be spent wherever the politicians want to spend it.
With this in mind, we still hear stories here in California about teachers needing to pay for some supplies within their own classrooms, out of their own personal money, because the funding still isn’t being made available to pay for all of these things.
In addition, we’ve been told over the years that the Social Security program here in the U.S. is in serious danger financially, but did you know that Congress has taken hundreds of billions of dollars of the money that’s been paid into the program by all of us, and has diverted it to other purposes?
These are the kinds of things that can happen behind the scenes with politicians, while the average U.S. citizen may not know that this has been going on.
So now with this new transfer tax being levied upon properties that will be selling in L.A., do you think you’ll see politicians in other cities across the U.S., getting excited about implementing this within their own cities, too? In my opinion, any city that is experiencing a major homeless problem could now be targeted with a new measure like this one being put on an upcoming ballot, because people would like to remedy the homeless problem wherever they live, but they’d like someone else to pay for it.
So pay attention to what’s going on within your market, because a ballot measure like this one might be coming your way.