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28 May, 2024
 
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'Mansion tax' introduced to help homeless Californians

L.A. residents who own multi million dollar homes are rushing to sell before the April 1st kickstart date of the 'mansion tax'

Source: The Telegraph

Some of the biggest names in Hollywood are rushing to sell their multi-million-dollar houses in Los Angeles before a new “mansion tax” kicks in on April 1.

In November voters supported Measure ULA - “United to House L.A.” - which is intended to raise up to $1 billion from luxury house sales to fund affordable housing projects.

From April 1, the sellers of homes valued at between $5 million (£4 million) and $10 million (£8 million) will pay a four percent tax to the city.

Those selling homes over $10 million will pay a 5.5 percent tax.

Los Angeles introduced the tax to “fund affordable housing projects and provide resources to tenants at risk of homelessness”.

It came as the homelessness crisis in the city is growing.

Last year, the Los Angeles Homeless Services Authority estimated 42,000 people were homeless, up from 28,000 in 2016.

California has the highest poverty rate in the United States.

The tax has sparked a frantic scramble by estate agents who have been slashing prices and looking to offload mansions quickly.

One property broker reportedly offered a $1 million bonus to any estate agent who could sign up a buyer for a $28 million Bel-Air mansion before the deadline.

Celebrities who recently sold their properties included Mark Wahlberg who sold for $55 million.

However, his 12-bedroom, 20-bathroom mansion had been on the market for nearly a year, since well before Measure ULA was introduced.

Jim Carrey’s 12,700 sq ft property, on two acres, went on the market last month for $29 million.

One owner of a seven-bedroom, 11-bathroom mansion, with a basketball court and 70ft infinity pool, recently cut the asking price by $6 million, to $38 million, in an attempt to sell by next week.

Josh Altman, a broker and television personality, said: “I’m seeing deals get done that should never have gotten done.”

The tax is on sales prices, not profit, so sellers have to pay even if they are making a loss.

Amid spiraling house costs the tax was expected to be laid on four percent of all property sales in Los Angeles.

One luxury property broker told CNBC it had led to “dramatic price reductions on many homes” and wealthy buyers, able to make all-cash offers, had been snapping up mansions for bargain prices.

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