Los Angeles’ Mansion Tax Has Raised $439 Million: These Ritzy Neighborhoods Have Been Stung the Most

by Julie Gerstein

Contemporary valley of mansions in Thousand Oaks near Los Angeles, California. — Getty Images

The Los Angeles “mansion tax” has been in effect for less than 18 months, and already it has changed the city’s real estate game.

The levy, which is essentially a transfer tax on high-end properties sold within city limits, has so far raised more than $439 million, from 670 sales, for affordable housing and homeless initiatives in the city, according to the Los Angeles Housing Department.

But, as a consequence, the city’s luxury real estate market took a hit.

A tax to fight inequality

Los Angeles is home to some of America’s wealthiest people. But it is also infamous for Skid Row and the thousands of residents who are homeless and live on the streets. The city’s 2024 homeless census reported more than 75,000 unhoused people living on its streets, and the city is short around 500,000 units of affordable housing.

To make up for the shortfall, L.A. voters passed United to House LA in 2022, a ballot initiative that imposed a “mansion tax” on real estate transactions over $5 million. The program applies a 4% transfer tax on property sales between $5,150,000 and $10,300,000 and a 5.5% transfer tax on properties sold for $10,300,000 or more—on top of a preexisting .45% real estate tax for all home sales. And as you can imagine, wealthy homeowners were not happy.

The measure went into effect April 1, 2023 and in the months prior, moneyed home sellers scrambled to make deals before the deadline. In some cases, sellers offered major discounts to get sales done before the deadline.

“Botched” plastic surgeon Paul Nassif, for instance, offered buyers’ agents $1 million if they could get a deal done before the mansion tax went into effect (Nassir’s seven-bedroom, 12,000-square-foot mansion eventually sold—in June 2023—for $18.4 million).

Brad Pitt, on the other hand, lucked out and sold his $39 million compound on the last day of March 2023, narrowly avoiding a hefty $2.145 million fee. He wasn’t alone. Mark Wahlberg also got in right under the deadline and sold his Beverly Park mansion for $55 million in February 2023, though he’d originally priced it at more than $87 million. Both stars were part of a sell-off trend: Luxury home sales spiked in March 2023 before plummeting the next month.

A year before the mansion tax took effect, Los Angeles saw 366 single-family home sales of $5 million or more. In the 12 months after, there were 166—a 68% decrease.

Beyond speeding up some sales, the mansion tax also had many celebs, including Rashida Jones, Leeza Gibbons, and Maria Bello, opting to rent out their homes rather than deal with the real estate market.

L.A. isn’t the only city with a mansion tax. New York City instituted a one in 1989, which imposed a 1% tax on sales of properties of $1 million or more. Of course, the average home was a lot cheaper then—and in 1989, $1 million could buy you a mansion. Today, the median home listing price in NYC is $850,000.

Where the mansion tax hit hardest

L.A.’s expansive westside neighborhoods have accounted for nearly half of all “mansion tax” sales. The city’s 5th Council District, which includes exclusive communities like Bel-Air and Beverly Crest, contributed $83.3 million over 138 sales.

The 11th Council District, which includes Brentwood and Pacific Palisades, contributed $73.9 million via 174 sales. And Council District 4, which includes the star-studded Hollywood Hills, Silver Lake, and Los Feliz neighborhoods, brought in $59.4 million through 127 sales.

Some of Los Angeles’ ritziest enclaves, like Beverly Hills, Malibu, and Calabasas, are technically outside of the city boundaries and, therefore, aren’t subject to the tax.

Below, check out homes in some of the Los Angeles neighborhoods that have put the most money in the mansion tax pot.