A Los Feliz home that closes at exactly $5,400,000 owes the City of Los Angeles about $24,300 in transfer tax. Close it one dollar higher and the city bill comes to roughly $240,300. That is an extra $216,000 or so for a single dollar of price. Since July 1, 2026, that jump has been the most important number in pricing a house in this part of the market.
The jump comes from how Measure ULA is built. The City of Los Angeles Office of Finance charges a base transfer tax of 0.45% on every sale in the city. ULA adds 4% for transactions above $5.4 million and below $10.9 million, and 5.5% at $10.9 million or more. Both apply to transactions closing after June 30, 2026. The ULA rates are percentages of the whole consideration, not just the part above the threshold.
ULA taxes the whole price once the line is crossed
Income tax brackets apply a higher rate only to the dollars above each line. ULA works the other way. Once a sale crosses a threshold, the full price is taxed at the higher combined rate. Economists call this a notched tax, and that's the term UCLA Anderson researcher Yingru Pan uses for ULA.
Running the city's published rates across the prices around each line shows the shape:
| Sale price | Combined city rate | Approximate city transfer tax | Price after city transfer tax |
|---|---|---|---|
| $5,400,000 | 0.45% | $24,300 | $5,375,700 |
| $5,400,001 | 4.45% | $240,300 | $5,159,700 |
| $5,630,000 | 4.45% | $250,535 | $5,379,465 |
| $10,899,999 | 4.45% | $485,050 | $10,414,950 |
| $10,900,000 | 5.95% | $648,550 | $10,251,450 |
The base tax is $2.25 for every $500, and the city rounds up to the nearest $500, so the figures above are rounded to the nearest few dollars. The pattern holds regardless. The city also says the taxable value is the gross value, including any lien or encumbrance that stays on the property and any seller loan the buyer assumes.
The price band that nets less than $5.4 million
Look at the third row. A sale has to reach about $5.63 million before the price left after city transfer tax beats a sale at exactly $5.4 million. Between those two numbers is a band of roughly $230,000 where a higher contract price leaves less money after the city's tax. The same thing happens at the upper line. A sale at $10.9 million leaves less after tax than one a dollar below it. The price has to climb to about $11.07 million before it catches up.
The band changes how a list price and a counteroffer get set in Los Feliz. A buyer who knows the math reads a $5.5 million asking price differently from one who doesn't. A seller with a sincere offer at $5.45 million faces a question that has nothing to do with the house itself.
The line moves every July 1
The thresholds aren't fixed. The city adjusts them each year using the Bureau of Labor Statistics Chained Consumer Price Index. ULA took effect on April 1, 2023 with lines at $5 million and $10 million. In fiscal year 2025-26, The Real Deal reported $5.3 million and $10.6 million. They now stand at $5.4 million and $10.9 million.
So a price that was taxable last spring may not be taxable this fall. A Los Feliz home that closed at $5.35 million in May 2026 fell in the 4.45% tier. The same price closing after June 30 pays the 0.45% base rate only. For homes near the line, the closing date now matters as much as the price.
Two well-reported Los Feliz sales show how often homes priced in this range end up below the line. The steel-framed midcentury home known as the Steel House was being shopped off-market at $5.5 million, The Real Deal reported in September 2025. Variety later put the sale price at $5.2 million. That was $100,000 under the $5.3 million line in effect that fiscal year. At 2177 Fern Dell Place, a 1928 home on a double lot was listed at $6.5 million. It was repriced several times, most recently to $4.9 million in July, and closed at $4.4 million in late summer 2026, according to The Real Deal. No coverage of either sale connects the final price to ULA. Many things move a price. Still, both homes started above the line and closed below it.
What the data shows across the city
Citywide research shows the pattern more clearly. Pan's working paper, dated July 25, 2025, looked at City of Los Angeles sales from 2022 and 2023 around the original $5 million line. It found 47% more transactions in the $4.95 million to $5 million range than in the first taxable range just above it. Volume stayed suppressed at every price tier above $5 million. The paper also found that sales over $5 million fell far more sharply inside the City of Los Angeles than in Los Angeles County overall. It reports that luxury owners increasingly chose to remodel instead of selling.
The UCLA Lewis Center report by Michael Manville and Mott Smith, published in April 2025, found that the odds of a Los Angeles property selling above its tax threshold fell by as much as 50% after ULA took effect. The decline was steepest for non-single-family properties.
Both studies looked at the original $5 million line and the whole city, not Los Feliz specifically. But the effect they describe applies wherever homes trade near the threshold, and Los Feliz has many of them. When owners hold or renovate instead of selling, fewer homes in the $5 million range come up for sale. That leaves fewer comparable sales above the line to justify a price just over it.
Above the band, Los Feliz still trades
Los Feliz homes well past both lines kept closing in 2026. The Spanish Colonial Revival at 2400 Inverness Avenue, built in 1929 and covering more than 8,000 square feet, sold for $9.6 million in August 2026. At the city's published rates, that price falls in the 4.45% tier, about $427,200 in combined city transfer tax. In Laughlin Park, 2000 De Mille Drive sold for $24.75 million, as reported by The Wall Street Journal and Los Angeles Magazine in late September 2026. That price is in the top tier. At 5.95%, the city's schedule works out to about $1.47 million.
At those prices the jump at the line is a small share of the total. Just past the line, it swallows most of the gain from the higher price, so the pressure falls on homes that would otherwise sell for $5.4 million to $5.63 million, and $10.9 million to about $11.07 million.
Citywide, ULA had raised more than $1 billion from 1,435 transactions as of January 8, 2026. Sixty percent were single-family homes, and ZIP codes 90049, 90272 and 90077 produced the largest share, The Real Deal reported.
What Tuesday's ballot does and doesn't change
Election Day is Tuesday, November 3. Nothing on either ballot changes the math above for a typical Los Feliz sale:
- The courts. The California Court of Appeal upheld Measure ULA on December 15, 2025, rejecting the Howard Jarvis Taxpayers Association's challenge, Courthouse News reported.
- The statewide initiative. The association's measure to cap transfer taxes was withdrawn in June 2026 after a deal in Sacramento, and the compromise left real estate transfer taxes untouched, CalMatters reported. The replacement measure, Proposition 43, deals with limits on how local governments raise revenue. It doesn't repeal ULA.
- The city ballot. Proposition TE would exempt residential properties damaged or destroyed in the Palisades Fire when they are sold between January 7, 2025 and January 6, 2030 by whoever was the owner of record on January 7, 2025, the day the fire began, according to the city's voter information pamphlet. LAist's voter guide notes it's the only proposed ULA change going to voters. Efforts to exempt new apartment buildings were defeated.
Frequently asked questions
Does the tax apply only to the amount above $5.4 million? No. Under the city's rate table, sales above $5.4 million and below $10.9 million pay 4.45% combined, and sales of $10.9 million or more pay 5.95%. Both rates apply to the full price.
Will $5.4 million still be the line next year? The city recalculates the thresholds each year using the Chained CPI, so expect a new figure for transactions closing in the next fiscal year.
Does any of this apply to a home just across the city line? ULA applies to property conveyed within the City of Los Angeles. When a property sits partly inside the city, the city applies the tax in proportion to the value of the portion inside its boundaries.
This post is general information about a city tax. It isn't legal, tax or financial advice. Confirm how ULA applies to your own sale with a qualified attorney or tax professional.
If your Los Feliz home could sell anywhere near $5.4 million, the list price, the closing date and the counteroffer strategy all need to account for the city's math before the first showing. Chris Reisbeck prices homes near the threshold with that band in mind and negotiates with the after-tax number in view. Let's Connect.
