Every Westwood seller above $5.4 million needs a Measure ULA strategy. This guide covers the five planning approaches that work, the three common myths that don’t, and the net-proceeds math you should run before listing.
By Payman Shilian | The Shilian Group | Powered by Compass
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, accounting, or financial advice. Measure ULA rules, exemptions, thresholds, and interpretations can change. Sellers should consult qualified attorneys, CPAs, tax advisors, qualified intermediaries, and other licensed professionals regarding their specific situation before making any decisions related to a sale, 1031 exchange, ownership transfer, or tax planning.
Why Every Westwood Seller Needs a Plan
If you own property in Westwood worth more than the current Measure ULA threshold, the tax can materially affect your net proceeds when selling. Having a clear Measure ULA strategy is no longer optional. It is essential. The California Court of Appeal upheld the tax in December 2025, rejecting the constitutional challenge brought by the Howard Jarvis Taxpayers Association. The LA City Council declined to place a reform measure on the June 2026 ballot. A statewide repeal initiative is being discussed for November 2026, but that does nothing for sellers closing transactions this year.
For many Westside homeowners, this tax has become one of the largest closing costs in a transaction. Neighborhoods where home values frequently exceed the threshold include Westwood, Little Holmby, Holmby Hills, Bel Air, Brentwood, Beverly Grove, Pacific Palisades, and luxury condominiums along the Wilshire Corridor. A $6 million sale inside the City of Los Angeles generates approximately $240,000 in ULA transfer tax alone. A luxury estate sale at $12 million creates roughly $660,000 in additional tax. These numbers fundamentally change the economics of selling.
I’ve already written a separate explainer covering what Measure ULA is and how the tax brackets work. This article is different. It focuses on Measure ULA strategy. The legitimate planning considerations that can reduce your exposure, the timing decisions that affect how much you pay, and the common misconceptions that lead sellers in the wrong direction.
Where the Tax Applies. And Where It Does Not
Measure ULA, commonly referred to as the “Los Angeles mansion tax,” is an additional transfer tax imposed on real estate transactions within the City of Los Angeles. It covers residential property, multifamily property, commercial property, and certain vacant land transactions located within city boundaries.
This distinction matters because the tax does not apply everywhere on the Westside. Beverly Hills, Santa Monica, and Culver City are independent municipalities with their own transfer-tax structures. Unincorporated LA County areas outside City of LA jurisdiction are also exempt. If you’re selling in Beverly Hills or Santa Monica, ULA is not part of your cost picture. If you’re selling within the City of Los Angeles. And most of Westwood, Brentwood, Bel Air, and Pacific Palisades falls within city limits. It is.
Current Rates and Thresholds for 2026
As of July 1, 2026, the thresholds adjust for inflation. Sales between approximately $5,400,000 and $10,899,999 are taxed at 4% of the total sale price. Sales at approximately $10,900,000 or above are taxed at 5.5%. These rates apply to the entire transaction value, not just the amount above the threshold. Sellers should confirm exact figures with their advisors closer to closing, since thresholds adjust periodically.
The ULA tax sits on top of the existing LA County documentary transfer tax ($1.10 per $1,000) and LA City transfer tax ($4.50 per $1,000). Together, these add another $5.60 per $1,000. Roughly $33,600 on a $6 million sale. When you combine ULA with base transfer taxes, commissions, escrow fees, title, and closing costs, the total is significantly larger than what sellers faced before the tax took effect.
Here is what the approximate ULA tax alone looks like at common Westwood price points. At $5.5 million, the tax is approximately $220,000. At $7 million, approximately $280,000. At $10 million, approximately $400,000. At $12 million, approximately $660,000 under the higher rate. These figures do not include county or city transfer tax, commissions, or capital gains.
Why Westwood Sellers Are Especially Affected
Westwood is particularly affected because many homes now trade near or above ULA thresholds. This is especially true in Little Holmby, Westwood Hills, areas adjacent to Holmby Hills, luxury Wilshire Corridor condominiums, and larger single-family homes north of Santa Monica Boulevard. Even well-positioned three- and four-bedroom homes in the Westwood flats are approaching the lower threshold as values have appreciated.
In some cases, the tax is significant enough to influence listing strategy, pricing decisions, timing, and 1031 exchange planning. For Wilshire Corridor condo sellers considering a downsize within the corridor. A transaction I handle frequently. ULA exposure is part of the net-proceeds conversation from the first meeting.
Strategy One: Threshold-Aware Pricing
The most straightforward Measure ULA strategy involves pricing properties near the threshold line. This approach is most relevant to sellers whose home values fall within range of the $5.4 million or $10.9 million boundaries.
Consider the math. A property selling at $5,399,999 may avoid ULA entirely. One selling at $5,400,001 could trigger approximately $216,000 in transfer tax. A $50,000 difference in sale price can create a $216,000 difference in tax.
That does not mean pricing below the threshold is always the best move. Sometimes a higher sale price still produces stronger net proceeds. The key is running a detailed net-proceeds analysis before going to market. Selling at $5,350,000 with no ULA tax may yield approximately $4,782,000 after base transfer taxes and a typical commission. Selling at $5,600,000 with the 4% ULA tax may yield approximately $4,838,000. Only $56,000 more despite a $250,000 higher gross price. The margin is thinner than most sellers expect.
Near the upper threshold at $10.9 million, the same analysis applies. The jump from 4% to 5.5% adds approximately $163,500 in additional tax compared to selling just below that line. Your agent should build a net-proceeds table at $100,000 increments around the relevant threshold so you can see exactly where the breakpoints fall.
Strategy Two: Timing Around Threshold Adjustments
Thresholds adjust periodically for inflation, typically each July 1. They have risen from $5 million and $10 million in April 2023 to $5.4 million and $10.9 million as of July 2026. For sellers whose property value sits close to a threshold, timing may matter.
A property valued near a current threshold today may fall below the updated threshold after a future adjustment. A home worth $5.3 million would have owed approximately $212,000 if sold when the threshold was $5.15 million. After July 2026, that same sale falls below $5.4 million and owes nothing.
However, market conditions, interest rates, carrying costs, and opportunity cost must also be considered. Holding a property for months introduces risk. There is no universal answer, but threshold timing has become part of the Measure ULA strategy discussion for many Westside sellers. If your timeline is flexible and your property value falls within a few hundred thousand dollars of a threshold, this conversation is worth having.
Strategy Three: 1031 Exchanges and the ULA Tax
One common misconception is that a 1031 exchange eliminates ULA. That is generally not correct.
A 1031 exchange may defer certain federal and state capital gains taxes for qualifying investment property transactions. However, the ULA transfer tax still generally applies at closing. It is triggered by the sale and is due regardless of how the proceeds are reinvested.
That said, a properly structured 1031 exchange may still create significant benefits overall. For long-held Westwood investment properties with substantial appreciation, the deferred capital gains exposure can far exceed the ULA amount. A home purchased for $1.2 million in 1998 and sold for $7 million has roughly $5.8 million in gain. At combined federal and California rates, the capital gains tax could exceed $1.3 million. A 1031 exchange may defer that entirely. Dwarfing the $280,000 ULA bill.
Under current Treasury regulations, the ULA tax generally qualifies as a transactional cost that can be paid from exchange funds without triggering constructive receipt. Sellers should confirm this with their qualified intermediary. If you exchange into property outside Los Angeles city limits, you eliminate ULA exposure on the replacement side entirely. This is an increasingly common Measure ULA strategy for Westwood multifamily owners.
Strategy Four: Negotiating ULA Costs in the Deal
Although the tax is typically imposed on the seller, who actually bears the economic cost is a deal-by-deal negotiation. In certain market conditions, buyers competing for limited inventory may agree to absorb some or all of the cost. This can be structured as a purchase price adjustment, a credit at closing, or modified terms that offset seller costs.
A buyer who offers $6.2 million with a $240,000 ULA credit is effectively offering the same net as a $6.44 million sale without the credit. This varies dramatically depending on inventory levels, buyer demand, and market segment. In stronger luxury markets, sellers retain more leverage. In slower conditions, the tax burden may place downward pressure on pricing. Your agent should model ULA cost allocation into every offer comparison. This negotiation-based Measure ULA strategy is especially effective in multiple-offer situations.
Strategy Five: Evaluating Whether to Sell Right Now
For some homeowners, the most effective approach may simply be not selling immediately. The tax only applies upon transfer. Some owners choose to refinance instead of sell, hold long-term, lease the property, or delay downsizing decisions.
This is especially relevant for owners with low Proposition 13 tax bases, significant appreciation, low leverage, or strong rental potential. The November 2026 ballot may include a statewide initiative to restrict or repeal local transfer taxes like ULA. I am not suggesting you base your financial planning on a ballot measure, but if your timeline is flexible, the hold-versus-sell calculus changes.
For Westwood sellers considering a downsize to the Wilshire Corridor, the analysis is specific. The Prop 19 tax-base transfer, the equity release, and the lifestyle change all create urgency that may outweigh the ULA cost. But a seller who is not downsizing and does not need the liquidity should at least evaluate the hold option. Every seller’s situation is different.
Common Myths Sellers Should Avoid
Every high-value seller in Los Angeles has heard at least one of these ideas. Each deserves scrutiny.
The first myth is splitting the sale into multiple transfers to stay below the threshold. Los Angeles authorities have indicated that related transfers may be aggregated for tax purposes. Attempting this invites audit and potential penalties. Sellers should consult qualified legal counsel before attempting any ownership restructuring.
The second myth is that an LLC automatically avoids ULA. Entity transfers and ownership changes can still trigger transfer-tax analysis depending on structure and control changes. The entity wrapper does not necessarily insulate the transaction.
The third myth involves gift-then-sell approaches. Gifting the property to a family member and having the recipient sell it does not avoid the tax. Gift strategies may also create gift-tax implications, basis issues, and estate-planning complications. These should only be evaluated with experienced legal and tax advisors.
Any approach that attempts to technically restructure a transaction to evade the tax rather than legitimately plan around it carries legal risk. It is not something I would recommend or participate in.
How This Changes Your Listing Conversation
For higher-end Westside properties, ULA is now part of virtually every listing consultation. Conversations frequently include net-proceeds modeling, pricing around thresholds, timing considerations, 1031 exchange coordination, Prop 19 planning, and evaluation of investment alternatives. Net proceeds matter more than headline sale price.
Start the analysis early. Before you decide to sell, build the full cost picture: commission, ULA, base transfer taxes, capital gains or 1031 deferral, and any Prop 19 considerations if you are downsizing. Ask your agent how they handle ULA in offer negotiations. If your agent is not proactively modeling ULA into every offer comparison, you are not getting a complete picture.
Factor the annual threshold adjustment into your timeline. If you are within $200,000 of a threshold and your timeline is flexible, it may be worth waiting for the next July 1 adjustment. And if you are considering a 1031 exchange, engage a qualified intermediary early. The exchange timeline is strict, with 45 days to identify replacement property and 180 days to close.
Frequently Asked Questions About the LA Mansion Tax
What is the Measure ULA mansion tax rate in 2026?
As of mid-2026, transactions approximately between $5.4 million and $10.9 million are subject to a 4% ULA transfer tax. Transactions above roughly $10.9 million are subject to a 5.5% rate. These rates apply to the total sale price. Thresholds adjust periodically for inflation.
Does Measure ULA apply in Beverly Hills?
No. Beverly Hills is an independent city and is not subject to Measure ULA. The tax applies only within the City of Los Angeles boundaries. Santa Monica and Culver City have their own transfer-tax structures and are also separate from ULA.
Does the tax apply to condominiums?
Yes. Condominiums inside the City of Los Angeles are subject to Measure ULA if the sale price exceeds the applicable thresholds. This includes Wilshire Corridor condos in Westwood and high-rise units in Century City within city limits.
Can I avoid the tax with a 1031 exchange?
Generally no. A 1031 exchange may defer certain capital gains taxes for qualifying investment property transactions, but the ULA transfer tax still generally applies at closing. However, the ULA payment can typically be made from exchange funds without disqualifying the exchange. Exchanging into property outside LA city limits eliminates ULA exposure on the replacement side.
Is it better to price my home just below the threshold?
It depends on where your home’s market value falls. For properties valued within a few hundred thousand dollars above the threshold, the net-proceeds math often favors pricing below it. Your agent should model net proceeds at several price points to identify the optimal approach.
Can the buyer pay the ULA tax instead of the seller?
While the tax is typically imposed on the seller, the economic cost can be allocated through negotiation. Buyers in competitive situations may agree to absorb some or all of the cost through purchase price adjustments or closing credits.
Has the mansion tax been ruled legal?
Yes. In December 2025, the California Court of Appeal upheld Measure ULA, rejecting the Howard Jarvis Taxpayers Association’s constitutional challenge. A statewide repeal initiative may appear on the November 2026 ballot, but the tax is currently in full effect.
Can I split the sale into two transactions to stay below the threshold?
Los Angeles authorities have indicated that related transfers may be aggregated for tax purposes. Attempting to circumvent the threshold through fractional sales may invite audit and potential penalties. Consult qualified legal counsel before attempting any restructuring.
Are there exemptions?
Exemptions are narrow. Certain nonprofit, affordable-housing, community land trust, and government-related transfers may qualify. Most standard residential and commercial sales do not. Transfers exempt from the base LA City documentary transfer tax. Such as interspousal transfers incident to divorce. Are also generally exempt from ULA.
Final Thoughts
Measure ULA has fundamentally changed the economics of selling higher-end property within the City of Los Angeles. For many Westwood homeowners, the tax is significant enough to influence timing, pricing, investment strategy, and retirement planning.
The most effective Measure ULA strategy is usually not trying to outsmart the tax. Instead, it involves understanding the real numbers, the actual net proceeds, the timing implications, and the legitimate planning opportunities available. Consult with your CPA, tax attorney, and qualified intermediary to build a plan that reflects your specific circumstances.
As a Westwood resident and Westside real estate specialist, I regularly help sellers evaluate luxury listing strategy, Wilshire Corridor condo sales, threshold pricing, off-market opportunities, downsizing analysis, and Westside relocation strategy throughout Los Angeles.
Disclaimer: This article is for informational purposes only and should not be relied upon as legal, tax, accounting, or financial advice. Measure ULA regulations, thresholds, exemptions, and interpretations may change. Sellers should consult qualified attorneys, CPAs, tax professionals, escrow officers, qualified intermediaries, and other licensed experts regarding their specific situation before acting on any information discussed above.
