Summary
A study found that Los Angeles' "mansion tax," which taxes expensive properties, has slowed down new construction and reduced property sales. The tax was meant to fund affordable housing but has not generated the expected revenue, while also impacting housing development negatively.
Key Facts
- The "mansion tax" imposes a 4% tax on property sales from $5.3 million to $10.6 million and a 5.5% tax on sales above $10.6 million.
- It was designed to help fund affordable housing and support people at risk of homelessness.
- Since its introduction, new construction permits in Los Angeles have dropped by an average of 40%.
- Multifamily construction permits decreased by 27%, and single-family home permits decreased by 45%.
- The tax has raised around $480 million through 2024, less than the initially expected $600 million to $1.1 billion annually.
- Developers are hesitant to build due to the financial risks and uncertainties created by the tax.
- The city faces a shortage of nearly 500,000 affordable homes, exacerbated by decreased housing production.
