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Los Angeles will soon enact a historic tax on high-end real estate. In a cooling luxury housing market, sellers are scrambling to liquidate their property, and they’re sometimes sweetening the deal with supercars.
Last November, LA approved Measure ULA, known locally as the “mansion tax” according to The Los Angeles Times. It adds a 4% ownership transfer tax to real estate sales more than $5 million, increasing to 5.5% beyond $10 million to fund affordable housing and homelessness prevention. Scheduled to take effect April 1, the measure has sellers rushing to offload homes, including one listed for $16,495,000 in Beverly Hills—which comes with the buyer’s choice of an exotic car.
Listed on Zillow and Redfin, 12945 Mulholland Drive promises its buyer the option of an Aston Martin DBX707 or Vantage, McLaren GT, or Bentley Bentayga Extended Wheelbase if they close escrow before April 1. If the money isn’t paid in time, they get no car.
“We wanted to come up with a marketing strategy that would make sense with the house, which has this amazing 1,300-square-foot underground car gallery. So the buyer can choose one of these cars to put in the gallery,” agent Tatiana Derovanessian told the Times. “You get a house and a car. It’s a one-two punch.”
Another area agent told the Times they had used cars (and other incentives) to close deals numerous times in the past. But the current frenzy is on another level, with big bonuses for agents who can close quickly and others trying to divide up properties to limbo under the $5 million mark. Some have even resorted to suing the state, but they’re all stopgap measures against a tide turning against LA luxury home sellers.
Compared to first-quarter 2022, sales of homes more than $5 million in LA are reportedly down more than 10%. New listings, meanwhile have increased by 78%. Some developers are reportedly listing incomplete properties to minimize losses. It’s a crisis for the aristocracy that Measure ULA’s democratic passage shows isn’t widely sympathized with.
“Multi-millionaires are giving away luxury cars to get out of a tax that helps people sleeping in their cars,” remarked Peter Dreier, an Occidental College professor who reportedly worked with people who wrote Measure ULA.
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