- Los Angeles homeowners looking to sell their multimillion dollar homes are in a rush to sell this week.
- A new "mansion tax" approved by voters in November goes into effect April 1.
- The tax on LA's most expensive real estate transactions will create revenue for affordable housing programs.
If you have millions to spare, this week could be the perfect time to become the owner of a Los Angeles mansion.
A new tax approved by Los Angeles voters in November and going into effect April 1 will tack millions in expenses onto some of LA's priciest real estate transactions. Critics have told the New York Times and The Hollywood Reporter that the new tax will only encourage developers to build new homes outside of Los Angeles to avoid the new tax.
LA voters approved Proposition ULA, commonly referred to as the "mansion tax," by a 58% to 42% margin. The ballot measure proposed an additional tax on high-value real estate transactions; the estimated $600 million to $1.1 billion in tax revenue would go to fund affordable housing and homelessness prevention programs.
The new ordinance mandates that the seller pays a 4% tax on property sales between $5 million and $10 million, and a 5.5% tax on sales over $10 million. Because it goes into effect soon — April 1 — some of the more expensive homes on the market are steeply discounted in an attempt to sell before then.
Included in that group is the Star Resort being sold by Ikon Advisors, currently on the market for $6 million less than the current owner paid for it two years ago, according to CNBC.
The seven-bedroom mansion with nearly 17,000 square feet of indoor space and over 50,000 square feet of outdoor space is on sale for $38 million, which would lead to over $2 million in new taxes if it is sold after this week. The tax's calculator website says it is applied on top of LA's existing property transfer tax of 0.45%. Sellers have to pay the tax regardless of whether they are making a profit or losing money on a transaction.
Dan Malka, of Ikon Advisors, told CNBC that the discounted price means his company represents a seller that is motivated to get a deal done as soon as possible, and said the price will go up to at least $41 million once the new tax is in effect, with no intention of accepting offers below that price.
The massive Brentwood home also features a Kobe Bryant-themed half basketball court, along with murals of Bryant and other NBA legends including Shaquille O'Neal, Magic Johnson, and Steph Curry.
The Star Resort includes a car showroom, a 70-foot infinity pool, a home theater, a practice putting green, and an indoor sports simulator for golf, soccer, and hockey. The listing for the massive mansion has an endless list of features and amenities, including several fireplaces, lounge areas, a gym, cactus garden, and a 250-bottle wine cellar spread across four stories of indoor and outdoor space.