City of Los Angeles Provides Additional Guidance to Measure ULA Exemptions
The City of Los Angeles Office of Finance has just updated the Real Property Transfer Tax and Measure ULA FAQs on its website. The update provides additional clarity regarding the applicable exemptions to Measure ULA, the recently enacted special transfer tax imposed on transfers of real property over $5,000,000 in the City of Los Angeles. (See our prior client alerts outlining the impacts of Measure ULA and the recent legal challenges.) Per the updated FAQ, all transactions that are exempt from the base transfer tax per local, state, or federal laws and regulations are also exempt from the Measure ULA special transfer tax. As a consequence, it appears that exemptions that apply to the base transfer tax will also apply to the Measure ULA special transfer tax.
As originally issued, the FAQ (now updated) listed various “special” exemptions that had been enacted as part of Measure ULA and subsequently added to the City of Los Angeles Municipal Code (LAMC). Those exemptions include an exemption for certain Qualified Affordable Housing Organizations (as defined under section 21.9.14 of the LAMC), certain non-profit entities under 501(c)(3) of the Internal Revenue Code, various federal, state and local governmental entities and instrumentalities, and entities or agencies exempt from taxation power under the California or U.S. Constitutions (all as set forth in section 21.9.15 of the LAMC).
However, it was unclear whether the exemptions that apply to the base transfer tax generally would also apply to exempt certain transfers from the Measure ULA special transfer tax. The update to the FAQ now provides the answer: yes. Accordingly, for example, deeds given to secure a debt instrument, certain transfers that occur due to bankruptcy or receivership, transfers between entities with identical ownership, and exchanges with the City of Los Angeles, will be exempt from the Measure ULA special transfer tax.
Please do not hesitate to contact us should you have any questions regarding the applicability of any exemptions to the base transfer tax or the Measure ULA special transfer tax.