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December 1, 2023

LA’s New Property Tax: Is it More Bother Than Benefit?

LA’s New Property Tax: More Bother Than Benefit?

• LA had high hopes for levying taxes on pricy property sales, believing it to be a jackpot of revenue for the city coffers.
• Turns out, someone misread the real estate crystal ball. The tax has collected much less fish in the sea than the city forecasted.
• Intel’s data nerds rolled up their sleeves and found out that the tax has been a party pooper for the real estate industry as well.
• Instead of leading to a money waterfall, it’s more like a leaky faucet, dribbling dollars into the city budget.
• The grand idea was to loot the rich to fund services for the poor. But folks, the math seems to be a little off.
• Like denying a child the last piece of candy, this tax has spoiled some high-end property sales.
• Coupled with this, the new tax has also gifted the real estate industry a splitting headache.

‘Tax’ and ‘Relax’ – two words not meant to be in the same sentence.

Breaking down the effects of the LA’s property sales tax:

• LA’s tax strategy? Simple: hit where it hurts. The idea was to introduce a new progressive real estate tax on luxury property sales. In theory, it sounds like Robin Hood’s heroics, “rob from the rich, give to the poor.”
• The result? Far from a heroic saga. The new tax has been a downer, curbing investor enthusiasm and chilling the high-end real estate industry like ice in a champagne bucket.
• The ‘big buck’ expectation from the tax seems to have popped like a real estate bubble, bringing in lesser revenues than the city’s magic number.
• In addition to starving the city of funds, the tax has also unnerved the real estate industry. The fear of the taxman has put a damper on high-priced property sales.
• Contrary to the city’s dreams of a financial windfall, this taxing reality has been more like finding loose change in the couch.

A Cocktail of Tax and Frustration – Not on the House.

The real estate industry’s sour sip of the new tax:

• Nothing drains the fun out of a sale like taxation. The real estate industry, escaping through the back door, feels the same about LA’s new tax.
• Its impact on luxury property sales has been steeper than an unplanned trip down the stairs. The tax seems to have scared off luxury buyers like a ghost in a haunted mansion.
• Blowing a hole in the dreams of many realtors, it’s been offering more torments than torrents.
• The industry feels like it has been thrown under the bus while the city had been dreaming of its tax revenue balloon.

Hot Take:

Donning my news top hat and monocle, allow me to add some spice on LA’s new property tax saga. So, LA tried to channel its inner Robin Hood with a new tax on luxury property sales, but ended up playing more of the Sheriff of Nottingham – scaring the nobles away and coming up short on the loot. Maybe they should have consulted an oracle or, better yet, some real estate and finance wizards before pulling the “tax trigger”. The execution seems to have a sharp drift from the plan, and instead of riding a wave, the city, like a surfer caught in a whirl, seems to be gasping for air in a sea of troubles. The real estate industry is doing a dainty dance along the sidelines, trying its best not to step on the tax landmines. So here’s a piece of priceless wisdom – tax with caution, or you might end up spooking the golden goose!

Original article: https://www.inman.com/2023/11/29/what-other-cities-can-learn-from-las-rocky-mansion-tax-rollout/

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Martin Towers


Martin is an ex Real Estate Agent turned digital marketer and entrepreneur now specialising in helping Realtors all around the world

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