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2. Real Residential Or Commercial Property Transfer Tax And Measure ULA FAQ
   
   Real Residential Or Commercial Property Transfer Tax and Measure ULA FAQ
   
   Prices Calculate tax
   
   Tax Due
   
   Effective for transactions closing after June 30, 2025, the new limits for ULA will be $5,300,000 and $10,600,000. Transactions above $5,300,000 however under $10,600,000 will be assessed a 4% tax and transactions $10,600,000 and up will be assessed a 5.5% tax.
   
   - Link to United to House LA (ULA) Dashboard (Los Angeles Housing Department).
   - Link to Source Data
   
   
   How typically is the City's real residential or commercial property transfer tax used?
   
   The City's genuine residential or commercial property transfer tax applies on all documents that communicate real residential or commercial property within the City, unlike residential or commercial property taxes which occur every year. The genuine residential or commercial property transfer tax is an excise tax on the privilege of selling a genuine residential or commercial property interest, not a tax on the residential or commercial property itself, and is calculated on the consideration or value of the genuine residential or commercial property interest communicated.
   
   Does the City enforce a real residential or commercial property transfer tax aside from the special tax imposed under Measure ULA?
   
   Yes, the City enforces a genuine residential or commercial property transfer tax on all documents that communicate genuine residential or commercial property within the City. Today tax (" Base Tax") is calculated based on the consideration or value of the real residential or commercial property interest conveyed at a rate of 0.45%. The unique tax under Measure ULA (" ULA Tax") enforces an additional tax on top of the Base Tax.
   
   What is Measure ULA and how does it work?
   
   Measure ULA established the ULA Tax to money affordable housing jobs and provide resources to occupants at risk of homelessness. The ULA Tax is troubled all files that communicate real residential or commercial property within the City of Los Angeles when the factor to consider or value of the real residential or commercial property interest communicated goes beyond a threshold of 5 million dollars, or is ten million dollars or greater, respectively.
   
   What are the rate components of the Base Tax and the ULA Tax under the City's real residential or commercial property transfer tax?
   
   The rate elements are as follows:
   
   - The Base Tax rate of $2.25 per $500 or part thereof (" Base Rate").
   - The ULA Tax rates of, 1) 4% for residential or commercial properties conveyed over $5,150,000, however under $10,300,000 and 2) 5.5% for residential or commercial properties conveyed at $10,300,000 or more (" ULA Rates").
   - The particular language for the brand-new rates can be discovered here: https://clkrep.lacity.org/onlinedocs/2022/22-1100-S2_ord_187692_1-1-23.pdf.
   - The chart below is summary of the rates:.
   
3. Note: the City's Base Rate is $2.25 for every $500 or fractional part thereof. A transfer in which the value of the residential or commercial property communicated is not divisible by $500 will be rounded up to the closest $500 for the calculation of the Base Tax. This does not use to the ULA Rate calculations, which are percentage-based.
   
   When did the ULA Tax go into impact?
   
   The ULA Tax applies to qualified conveyances of real residential or commercial property interests that occur on or after April 1, 2023.
   
   How will the City use the April 1 efficient date of the ULA Tax?
   
   The City's treatment for applying the ULA Tax is designed on the ownership modification rules under California Board of Equalization residential or commercial property tax rule 462.260 for all documents based on the City's genuine residential or commercial property transfer tax. If a change of ownership occurred before April 1 but is gotten by the county for tape-recording on or after April 1, 2023, the taxpayer will require to supply proof of the actual transaction date to show that it in fact took place before the April 1, 2023 efficient date of the ULA Tax.
   
   Will the value thresholds under the ULA Tax be adjusted every year?
   
   Consistent with the Measure ULA, the worth thresholds of when to use the ULA Tax and its corresponding rates are changed yearly based on the Bureau of Labor Statistics Chained Consumer Price Index.
   
   How will the City's real residential or commercial property transfer tax be applied to or commercial properties that are situated partly within the borders of the City?
   
   The genuine residential or commercial property transfer tax will be applied in percentage to the worth of the real residential or commercial property interest that was transferred within the limits of the City. If an evaluation of the genuine residential or commercial property interest isn't available, the genuine residential or commercial property transfer tax ought to be applied based upon the square video of the residential or commercial property within the boundaries of the City, as a proportion of the total factor to consider or worth of the real residential or commercial property interest conveyed.
   
   How will the City deal with over payments or under payments of the real residential or commercial property transfer tax?
   
   If the City, through its compliance procedure, identifies a potential over payment or under payment, the City will inform the parties to the deal of the potential overpayment or underpayment. In cases of overpayment, taxpayers will need to submit a demand for refund from the Office of Finance. The Claim for Refund Application can be found here:
   
   https://finance.lacity.gov/sites/g/files/wph1721/files/2021-04/refundclaim%20%281%29.pdf
   
   In case of underpayment, the taxpayer will get an invoice for the overdue balance.
   
   Exist any exemptions for the ULA Tax?
   
   Yes, Measure ULA does supply exemptions for the ULA Tax. The ULA Tax will be not be suitable on documents that convey genuine residential or commercial property within the City of Los Angeles if the transferee is explained under freshly added areas 21.9.14 and 21.9.15 of the Los Angeles Municipal Code (" LAMC"). The transferee descriptions are as follows:
   
   Qualified Affordable Housing Organizations under LAMC Section 21.9.14
   
   - A non-profit entity within Internal Revenue Code section 501( c)( 3) with a history of inexpensive housing development and/or affordable housing residential or commercial property management experience.
   - A Neighborhood Land Trust, or Limited-Equity Housing Cooperative that has a history of economical housing advancement and/or budget friendly housing residential or commercial property management experience.
   - A restricted partnership or restricted liability company wherein an acknowledged 501( c)( 3) nonprofit corporation, neighborhood land trust, or limited-equity housing cooperative is a basic partner or handling member and such 501( c)( 3) not-for-profit corporation, community land trust, or limited-equity housing cooperative has a history of budget-friendly housing advancement and/or cost effective housing residential or commercial property management experience, or such restricted collaboration or limited liability business consists of a partner or member, respectively, that has a history of cost effective housing development and/or budget friendly housing residential or commercial property management experience.
   - A community land trust or limited-equity housing cooperative partnering with a skilled non-profit company.
   - A community land trust or limited-equity housing cooperative that does not demonstrate a history of economical housing development and/ or affordable housing residential or commercial property management experience which records a cost covenant, constant with section 22.618.3( d)( 1 )( i). b. of the Los Angeles Administrative Code, on the residential or commercial property at the time of the acquisition.
   The Los Angeles Housing Department administers ask for ULA tax exemptions under LAMC Section 21.9.14.
   
   Other Exemptions under LAMC Section 21.9.15
   
   - A recognized 501( c)( 3) entity which got its preliminary IRS decision letter classification letter a minimum of ten years prior to the transaction and has possessions of less than $1 billion.
   - The United States or any company or instrumentality thereof, any state or area, or political neighborhood thereof, or any other federal, state or regional public firm or public entity.
   - Any entity or company exempt from the City's tax power under the California or U.S. Constitutions.
   - All other deals which are exempt from the base Real Residential or commercial property Transfer Tax per regional, state, or federal laws and regulations.
   The Office of Finance administers demands for ULA tax exemptions under LAMC Section 21.9.15. To request a decision of an entity's exemption from the ULA under 21.9.15( a), please send the following documents and info to finance.ula@lacity.org.
   
   - Power of Attorney.
   - Legal name.
   - Mailing address.
   - IRS 501 (c)( 3) decision letter showing the efficient date of the exemption status.
   - Newest Form 990 or most recent audited monetary statements.
   Once the proper documents has actually been offered and a decision of exemption has been made, the Office of Finance will supply a letter certifying that deals where the entity is the buyer/transferee are exempt from the tax. The letter benefits one year from the date of the letter.
   
   If a transaction has actually currently happened and the tax was paid, but the buyer subsequently believes it receives an exemption, they will require to submit a refund claim utilizing the form noted above.
   
   Is the very same measure utilized to identify the Base Tax and the ULA Tax?
   
   For the Base Tax, it is determined based on net value of the residential or commercial property conveyed (unique of the value of any lien or encumbrance staying thereon at the time of sale.) For the ULA Tax, it is calculated based upon gross value (consisting of the value of any lien or encumbrance remaining thereon at the time of sale.)
   
   If the buyer is assuming the seller's loan, is the assumed loan quantity excluded from the value of the residential or commercial property communicated?
   
   For the Base Tax, it is computed based on net value (special of the assumed loan quantity.) For the ULA Tax, it is computed based upon gross value (including the assumed loan amount.)
   
   If you have any concerns regarding the ULA Tax, please contact finance.ula@lacity.org or (213) 635-7277.
   
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