If you live in Los Angeles, you may be subject to the mansion tax. Here is a brief overview of how it works and what you need to do if you are affected by it.
What is the mansion tax?
The mansion tax is a new tax on high-end real estate in Los Angeles County. It was approved in November 2022 and requires taxes to be paid on properties that sell for $5 million or more. The tax rate is 4%, increasing to 5.5% if the property sells for $10 million or more. This means that Los Angeles residents must pay an additional tax on top of the regular property taxes. The purpose of the mansion tax is to bring in additional revenue for the county, which can be used for various projects, such as housing, infrastructure, and public services. It has officially gone into effect as of April 1st, 2023.
What are my responsibilities as a mansion taxee?
As a mansion taxee in Los Angeles, you have several responsibilities to fulfill. This tax applies to all real estate transactions within the Los Angeles County borders and is due within 45 days of the sale or transfer of the property. As a mansion taxee, it is your responsibility to properly calculate and pay the mansion tax. You must also be aware of any changes to the regulations and stay up-to-date on filing deadlines. Additionally, you are responsible for filing all required documents with the County Tax Office in order to have your tax accurately assessed.
How can I reduce my mansion tax bill?
Los Angeles homeowners may be feeling the pinch of the new mansion tax, but there are ways to reduce your tax bill. First, take advantage of the homestead exemption. This exemption allows homeowners to reduce their tax bill by deducting a certain percentage from their assessed value. Next, consider tax credits and deductions. Certain credits and deductions such as mortgage interest payments and property taxes can help reduce the amount of taxes owed. Reaching out to your local government officials and speaking up can often result in getting a reduced rate, but this has already been voted on.
What should I do if I need more time to pay my mansion tax?
If you find yourself unable to pay your mansion tax on time, don’t worry. The City of Los Angeles offers several solutions. You can apply for an extension or an installment payment plan to help spread out your payments. To apply for an extension, you must complete a form and submit it before the due date of the tax bill. You will need to provide proof of your financial hardship in order to be approved. Alternatively, you can apply for an installment payment plan, which allows you to pay off the taxes in monthly installments. It’s important to keep in mind that any unpaid taxes will incur interest and late fees, so make sure you keep up with your payments.
Who else is affected by this tax?
According to Million Dollar Listing’s Josh Altman, the tax will have a greater impact on the real estate market than originally anticipated. Altman says that anyone who owns a home below $5 million will see a decrease in the value of their home should they attempt to sell. This is due to the fact that the mansion tax could lead to an overall decrease in the market values of homes due to a decrease in demand. Overall, while the mansion tax is intended to target the wealthy, it could have unintended consequences on those with lower-priced homes who are looking to sell.
Where can I find more information about the mansion tax?
To learn more about the mansion tax, check out the City of Los Angeles Department of Finance website for all the details. Additionally, you can find information about the mansion tax on your property tax bill. If you’re still unsure about how it works or how it applies to you specifically, speak to a knowledgeable real estate lawyer in your area to get the answers you need. Understanding the mansion tax is an important step in ensuring your home is properly taxed and your finances are in order.
Whether your plan is to buy or sell in Los Angeles, consider the tax in order to figure out the best time to make your move.