Measure ULA: What Every LA Apartment Owner Needs to Know

Measure ULA, officially the "Homelessness and Housing Solutions Tax," took effect April 1, 2023 and fundamentally changed the economics of selling apartment buildings in the City of Los Angeles valued above $5.3 million (CPI-adjusted; originally $5M at inception). As the most significant transfer tax in California history, ULA has reshaped buyer behavior, compressed deal volume, and created new structuring considerations that every apartment building owner must understand before listing.

This analysis is based on the LAAA Team's proprietary data from 455+ closed multifamily transactions, including our direct analysis of every $10M+ apartment sale in LA City from 2021 through 2024.

What Is Measure ULA?

Measure ULA imposes an additional real property transfer tax on sales within the City of Los Angeles. The thresholds are indexed to CPI and adjusted annually. As of July 1, 2025, the current thresholds are:

Sale Price	ULA Tax Rate	Tax Amount Example
Below $5.3M	0% (existing 0.45% city tax only)	$5M sale: $0 ULA
$5.3M to $10.6M	4%	$7M sale: $280,000
Above $10.6M	5.5%	$15M sale: $825,000

The tax applies to the entire sale price, not just the amount above the threshold. A $5.4M sale triggers a $216,000 ULA tax. The original thresholds when ULA took effect in April 2023 were $5M and $10M; they are adjusted upward each July based on the Bureau of Labor Statistics Chained CPI.

ULA is paid by the seller at closing, in addition to the existing City of LA documentary transfer tax of $4.50 per $1,000 of value and the County transfer tax of $1.10 per $1,000.

The Market Impact: LAAA Team Data

We analyzed every apartment building transaction above $10M in the City of Los Angeles for two years before and two years after ULA took effect. The results are stark:

Metric	Pre-ULA (2021-2022)	Post-ULA (2023-2024)	Change
Number of sales	215	115	-47%
Total sales volume	$7.67B	$3.83B	-50%
Avg price per unit	$398,754	$325,909	-18%
Avg price per SF	$406	$327	-19%
Avg cap rate	3.86%	4.82%	+96 bps

To be clear: interest rate increases also contributed to these changes. But ULA's impact is distinct and additive. The tax directly reduces seller proceeds, which either compresses sale prices or removes properties from the market entirely as owners hold rather than sell at reduced net proceeds.

Year-by-Year Breakdown

Year	Sales	Volume	Avg $/Unit	Avg Cap
2021	94	$2.75B	$355,553	3.87%
2022	121	$4.92B	$427,803	3.86%
2023	67	$1.78B	$327,792	4.51%
2024	48	$2.05B	$324,293	5.13%

2024 was the weakest year: only 48 sales at the lowest per-unit pricing ($324,293) and highest cap rate (5.13%) of all four years. Meanwhile, 2022 saw 121 sales at $4.92B, likely inflated by a rush of pre-ULA closings.

How ULA Affects Different Sale Price Tiers

$5.3M to $10.6M: The Value-Add Dead Zone

The 4% ULA tax on sales between $5.3M and $10.6M creates a particularly painful dynamic for value-add investors. A buyer who purchases at $6M, invests $500K in renovations, and plans to sell at $8M in five years now faces a $320,000 ULA bill on exit. That eats directly into the return on investment and makes many value-add business plans unpencilable.

As we saw firsthand with our listing at 11616 Burbank Blvd in North Hollywood (21 units, listed at $9.9M): "Due to ULA, we had to find a buyer who was looking to buy and hold the property long term. For any buyer looking to increase value and sell in 5 or 10 years, they would need to account for the 5.5% ULA Transfer Tax on the future sale. That massive closing cost on the exit eats into any underwritten profits and kills their expected IRR, making any deal of this size nearly impossible to pencil."

The solution was finding a long-term hold buyer who had no plans to resell.

Above $10.6M: Institutional Impact

At the 5.5% rate, ULA becomes a six- or seven-figure line item. On a $15M apartment building, ULA is $825,000. On a $25M building, it is $1,375,000. For context, that is often more than the entire brokerage commission on the transaction.

The data confirms the impact: $10M+ apartment sales dropped from 215 in the two pre-ULA years to 115 in the two post-ULA years, a 47% decline.

Near the $5.3M Threshold: Structuring Opportunities

Properties valued near the $5.3M threshold create structuring opportunities. A sale at $5,299,999 owes zero ULA. A sale at $5,300,001 owes $212,000. This cliff effect incentivizes creative deal structuring for properties in the $5.3M to $5.8M range.

ULA and 1031 Exchanges: A Critical Distinction

This is the single most important ULA fact for apartment building sellers considering a 1031 exchange: ULA is NOT deferred in a 1031 exchange.

When you execute a 1031 exchange, federal capital gains tax, California state income tax, depreciation recapture, and NIIT are all deferred. But ULA is a transfer tax, not an income tax, and it is due at the close of escrow regardless of whether you exchange.

However, the taxes that a 1031 does defer typically dwarf ULA. On a $7M sale with $3M in capital gains:

• ULA (4%): $280,000
• Federal capital gains (20%): $600,000
• California state tax (13.3%): $399,000
• Depreciation recapture (25%): varies, often $200K-$400K
• NIIT (3.8%): $114,000

Total deferred via 1031: $1.1M+. ULA paid regardless: $280K. The 1031 exchange still saves four to five times more than ULA costs. This is why exchanging remains the optimal strategy for most sellers, even with ULA.

For a deeper dive, see our 1031 Exchange Guide for LA Apartment Owners.

Deal Structuring: How We Navigate ULA

Commission Restructuring

In our sale of 11616 Burbank Blvd (21 units, North Hollywood), we restructured the transaction after contingency removal to benefit both buyer and seller. The buyer agreed to pay the brokerage commissions directly, and the purchase price was reduced by the same amount. This lowered the recorded sale price, reducing the ULA tax owed by the seller without changing the economics of the deal for either party.

Threshold-Aware Pricing

For properties valued near $5.3M or $10.6M, we analyze whether pricing just below the threshold produces higher net proceeds for the seller than pricing above it. A property that might list at $5.5M could net the seller more at $5.25M after accounting for the $200K+ ULA cliff.

Timing Considerations

Properties in the City of LA near the thresholds may benefit from listing at a price point that avoids ULA, then allowing the buyer to negotiate down naturally rather than starting above the threshold and absorbing the tax.

Who Is Exempt from ULA?

For conventional apartment building buyers and sellers, the short answer is: nobody.

ULA exemptions are limited to:

• Non-profit 501(c)(3) organizations with affordable housing development experience
• Community Land Trusts organized as non-profits
• Limited Equity Housing Cooperatives
• Governmental entities
• Established 501(c)(3)s with under $1B in assets and 10+ years of IRS qualification

A standard for-profit buyer or seller of an apartment building above $5.3M in the City of LA will pay ULA with no exemption path. The non-profit exemptions require demonstrated affordable housing experience, including completion of at least 2 affordable housing projects within the prior 6 years.

Sell vs. Hold: The ULA Decision Framework

ULA has changed the sell-vs-hold calculus for many LA apartment owners. Here is how to think through it:

Reasons to Sell Despite ULA

• Return on equity is low: If your equity is earning 3% and could earn 6-8% redeployed, ULA is a one-time cost against permanent improvement in returns
• 1031 exchange offsets: Deferred capital gains (typically 30-40% of gain) far exceed ULA (4-5.5% of sale price)
• Management fatigue: Quality-of-life factors and regulatory burden in LA (RSO, LAHD, habitability) may outweigh holding for ULA savings
• Interest rate environment: If rates drop, buyer demand increases and you can potentially sell at a higher price that absorbs the ULA impact

Reasons to Hold

• Property value near a threshold: If your building is worth $5.5M, the $220K ULA is disproportionate; waiting for appreciation above $6M or refinancing may make more sense
• ULA may change: Legal challenges and political momentum may modify or repeal the tax
• Strong cash flow: If current returns are satisfactory, there is no urgency to trigger a taxable event

LA City vs. Outside LA City

ULA applies only within the City of Los Angeles. Properties in Glendale, Burbank, Pasadena, Santa Monica, Culver City, and unincorporated LA County are not subject to ULA.

This has created a notable bifurcation in the market. Investors looking for $5M+ apartment buildings (above the $5.3M ULA threshold) increasingly favor independent cities where ULA does not apply. Our data shows transaction velocity in cities like Burbank, Pasadena, and Glendale has held up better than comparable LA City submarkets in the $5M-$15M range.

Revenue and Policy Context

ULA was projected to generate $923M annually based on FY 2021-22 transaction data. In practice, revenue has fallen significantly short of projections because the tax itself reduced the volume of transactions it was designed to tax.

The funds are earmarked for affordable housing production (70%) and homelessness prevention (30%). The policy trade-off is real: ULA raises revenue for housing programs but simultaneously reduces transaction velocity, which reduces future tax revenue and constrains the market for existing apartment building owners.

Frequently Asked Questions

What is Measure ULA and when did it take effect?

Measure ULA is an additional real property transfer tax on sales within the City of Los Angeles, effective April 1, 2023. Thresholds are CPI-indexed: as of July 2025, the rate is 4% on sales between $5.3M and $10.6M, and 5.5% on sales above $10.6M. It applies to the entire sale price, not just the amount above the threshold.

How much is the ULA tax on a $7 million apartment building?

A $7M sale within the City of LA triggers a ULA tax of $280,000 (4% of $7M), paid by the seller at closing. This is in addition to the existing City and County transfer taxes of approximately $39,900.

Is ULA deferred in a 1031 exchange?

No. ULA is a transfer tax, not an income tax, and is due at closing regardless of whether the seller executes a 1031 exchange. However, the federal and state income taxes deferred by a 1031 (typically $1M+ on a $7M sale) far exceed the ULA amount, making exchanges still highly beneficial.

How has ULA affected the LA apartment market?

Based on our analysis of every $10M+ apartment sale in LA City, transactions dropped 47% (from 215 to 115) and total volume dropped 50% (from $7.67B to $3.83B) comparing the two years before ULA to the two years after. Average per-unit pricing fell 18% and cap rates expanded 96 basis points.

Does ULA apply to properties outside the City of LA?

No. ULA applies only within the City of Los Angeles. Glendale, Burbank, Pasadena, Santa Monica, Culver City, Beverly Hills, and unincorporated LA County are not subject to ULA. This has made non-LA-City markets more attractive for $5M+ transactions.

Can I structure my sale to avoid or reduce ULA?

For properties near the $5.3M threshold, pricing below the threshold eliminates ULA entirely. Commission restructuring (shifting broker fees to the buyer to reduce the recorded sale price) can also reduce ULA exposure. We analyze every listing's ULA exposure and recommend the optimal structure.

Who is exempt from Measure ULA?

Exemptions are limited to non-profit 501(c)(3) affordable housing developers, community land trusts, limited equity housing cooperatives, governmental entities, and established non-profits with under $1B in assets. Conventional for-profit buyers and sellers have no exemption path.

Should I sell my apartment building now or wait for ULA to change?

The decision depends on your return on equity, tax situation, and hold timeline. Legal challenges to ULA are ongoing, and political dynamics may evolve. But waiting for repeal is speculative. If your equity is underperforming, a 1031 exchange still produces significant net tax savings even after ULA. Call Glen Scher at (818) 212-2808 to model your specific scenario.

How do Glen Scher and Filip Niculete handle ULA in their listings?

We model ULA exposure on every listing above $4.5M in the City of LA. For properties near the $5.3M and $10.6M thresholds, we analyze whether pricing below the threshold produces higher net proceeds. We have executed commission restructuring and creative deal structures to minimize ULA impact on multiple transactions. Our sellers receive a detailed net proceeds analysis that accounts for ULA, closing costs, and 1031 exchange savings.