MARCH 31, 2023, DEADLINE
WHO PAYS: BUYER OR SELLER? Apartment owners in the City of Los Angeles should be aware that March 31, 2023, will be the last day to sell your property without incurring this large tax. Any apartment owners that are determined to sell soon should immediately expedite plans to do so, as it will be incredibly challenging to obtain the same sales proceeds in the near term after this measure is in effect. A typical custom is for the seller to pay transfer taxes. In the few municipalities where large transfer taxes have been enacted, we have seen a shift to a 50/50 split. Our firm expects the same to happen here, as such a large fee is simply not palatable to merely be borne by one side.
MARCH 31, 2023, WILL BE THE LAST DAY TO SELL YOUR PROPERTY WITHOUT INCURRING THIS LARGE TAX.
CONCLUSION
The recent political climate has changed transfer taxes, which were previously an immaterial revenue source in California, into another bucket of funds to raise revenue. The likelihood of comparable measures passing in other California cities is great, with other similar measures being adopted in Culver City, Santa Monica, and many of the Bay Area municipalities. This super-sized transactional cost certainly will deter investment to some extent on new housing and encourage many apartment owners and operators to continue their exodus from California. Regardless of this measure, California apartment owners, especially those in urban municipalities, should continue to be wary of potential revenue extraction when deciding whether to retain, increase, or decrease their current portfolio.
DANIEL TEITELBAUM Real Estate Attorney Blackacre LLP
Dan has broad experience representing real estate clients, placing a specific focus on commercial leasing, acquisitions, dispositions, financing and construction. In commercial leasing matters, Dan represents both national and regional landlords and tenants across virtually all asset classes. Dan also has considerable experience representing investors, including private equity funds, developers, family offices and high net worth individuals, on real estate matters. He has guided clients in the purchase, sale, refinancing and leasing of creative office, industrial, commercial, retail and multifamily residential properties. In 2019, the National Law Journal recognized Dan with its 2019 Trailblazer distinction. Dan is a graduate of University of Southern California and University of California, Berkeley School of Law.
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