L.A.’s ULA Transfer Tax Further Hamstrings Investment: Report
The transfer tax has fallen well short of its revenue goals, cut multifamily investment by 46%, and led to significantly less housing production
By Greg Cornfield June 2, 2026 7:50 pm
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New data from think tank the RAND Corporation reveal the market-chilling consequences to commercial real estate investment caused by Los Angeles’ Measure ULA transfer tax on big property deals.
Although it became known as the “mansion tax,” ULA went into effect in April 2023 with a 4 percent levy on all real estate transactions above $5 million, and a 5.5 percent hit for sales over $10 million. (The thresholds increase annually with inflation.)
Since then, Measure ULA has raised $1.19 billion for affordable housing production, tenant rental assistance, education and eviction defense. That’s less than half of the $2.7 billion that proponents estimated would be generated by early 2026.
However, Rand found that Measure ULA has cut high-value real estate deals by 31 percent, and has had an even worse effect on commercial properties: Multifamily and commercial transactions fell more than 46 percent since the tax’s 2023 inception, compared with an about 28 percent decline for single-family homes.
The stark drop comes while tens of thousands of renting Angelenos leave the region each year, further shrinking the tax base.
Rand also found evidence that multifamily properties subject to ULA experienced higher rent growth following transactions, consistent with a partial “pass-through” effect.
Similar to renters, more multifamily developers have left the L.A. market entirely in the wake of ULA. Rand reported that ULA reduced the production of large multifamily developments by approximately 30 percent, even after accounting for Mayor Karen Bass’s Executive Directive 1 affordable housing streamlining program. (It would have been a 50 percent drop without ED1.)
Last summer, UCLA Lewis Center also concluded that ULA reduced the sale of parcels with greater likelihood of being redeveloped into apartments by 50 percent.
“Every rigorous examination of Measure ULA finds that it reduces the volume of real estate transactions, and particularly the sort of transactions that precede development,” UCLA reported.
According to the L.A. Housing Department, ULA funds have been committed to almost 800 affordable housing units, and more than $30 million has been distributed through emergency rental assistance programs for more than 4,000 households.
But, despite the $1.19 billion generated so far, Rand said that through the first quarter this year ULA led to the loss of more than 9,100 housing units, including what would have been about 1,000 privately produced affordable units. And, over a 10-year outlook, Rand projects ULA will further suppress construction to the tune of approximately 30,900 lost multifamily units.
Rand estimates that local, county and state governments have collectively lost approximately $452 million in revenue between 2023 and early 2026 because of reduced transaction activity and development — including approximately $80 million in revenue earmarked for the L.A. Unified School District — and those revenue losses could reach $1.68 billion by 2033. Rand cited a 2025 Harvard Business School paper on ULA that estimated that for “every dollar of revenue raised by ULA, 63 cents is lost through the negative effects of depressed transaction volume and frequency on the growth of the property tax base.”
Rand researchers argue that the ULA tax disincentivizes investment in L.A. The report concludes that its structure disproportionately impacts new multifamily and commercial projects because institutional investors often buy, sell or recapitalize assets during the early years after completion.
“Media reports and multiple pieces of independent research have all provided evidence that ULA has had important unintended consequences,” Rand’s report reads. “Permitting of new units in the city declined notably over the first two years of ULA.”
The construction industry has been measurably affected, too. Rand estimates that reduced development activity tied to ULA has cost approximately 16,650 full-time-equivalent construction jobs between 2023 and early 2026. And, looking forward, the report projects the loss of approximately 54,100 construction job-years over a 10-year period.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
