If you're selling an LA multifamily building priced above $5 million, you owe an additional transfer tax that most sellers don't price into their exit math until escrow opens. The tax is Measure ULA (United to House LA), and on a $10 million sale it's $550,000 — in addition to every other tax and fee you already owe.
Measure ULA is LA's steepest transfer tax. It's been in effect since April 2023. Most LA multifamily broker websites don't have a dedicated guide to it. None of the top-ranking broker sites walk through how to structure a $5M+ sale to reduce the impact through 1031 exchanges, timing, or alternative structures.
This is the guide.
Measure ULA is an LA City transfer tax, passed as a November 2022 ballot measure and effective April 1, 2023. It applies to real estate sales within the City of Los Angeles where the sale price exceeds $5 million.
The tax structure:
This is ON TOP of existing LA City and County transfer taxes (which total approximately 0.56% combined).
What Measure ULA funds: Affordable housing programs and homelessness prevention, administered by LA City.
Where it applies: City of Los Angeles only. Not LA County unincorporated. Not Santa Monica. Not Beverly Hills. Not Glendale. Not Burbank. Not Pasadena. Sales in these adjacent cities are NOT subject to Measure ULA.
Example 1: $7M LA City multifamily sale
- Measure ULA @ 4%: $280,000
- Plus existing LA City/County transfer taxes @ ~0.56%: $39,200
- Total transfer tax: $319,200
Example 2: $12M LA City multifamily sale
- Measure ULA @ 5.5%: $660,000
- Plus existing transfer taxes: $67,200
- Total transfer tax: $727,200
Example 3: $25M LA City multifamily sale
- Measure ULA @ 5.5%: $1,375,000
- Plus existing transfer taxes: $140,000
- Total transfer tax: $1,515,000
These numbers are real. Most sellers don't factor Measure ULA into their pro forma until after listing.
Three important clarifications:
It is NOT a capital gains tax. Measure ULA is a transfer tax — owed on the sale price regardless of whether you have a gain or a loss. Even if the building has declined in value since you bought it, Measure ULA still applies on sale.
It is NOT reduced by a 1031 exchange by itself. A 1031 exchange defers federal and California capital gains tax. It does NOT exempt the sale from transfer taxes. Measure ULA applies on the sale of the relinquished property even if you're doing a 1031.
It is NOT avoidable through entity structuring. Selling a building via LLC interest transfer, joint venture buyout, or similar structure does not typically avoid Measure ULA. LA has anti-avoidance rules. Some specific structures may reduce exposure but require careful legal review.
Five legitimate strategies:
Obvious but underused. If your building's market value is $5.2M, selling at $4.95M avoids Measure ULA entirely — saving $198,000 in tax (4% of $4.95M). If the $250K "discount" can be offset through clean presentation, faster close, or better buyer pool, the net is positive.
This strategy requires careful BOV modeling: is your building actually worth $5.2M, or is $4.95M the cleanest market-clearing number anyway? Often sellers "price high" and then reduce — if Measure ULA applies, the reduction costs them on both axes (lower price + transfer tax).
Measure ULA has faced legal challenges. A November 2024 initiative (Proposition DD) attempted to repeal Measure ULA; it failed. Future challenges may succeed. Sellers who don't urgently need to sell can monitor the legal and political landscape.
The risk: waiting indefinitely for Measure ULA to be repealed is a weak timing strategy. More productive is watching for specific legislative or judicial events and timing sales into favorable windows.
Measure ULA applies to City of Los Angeles sales only. If your property is on the LA City boundary and the jurisdiction is ambiguous, confirm which city's records govern. Properties that can be legitimately classified as non-LA-City sales avoid Measure ULA.
This is narrow — most LA City properties are clearly LA City. But for boundary-adjacent properties, verification matters.
A 1031 exchange does not exempt Measure ULA, but the combined impact of Measure ULA and capital gains tax can be managed together. Considerations:
Example: $10M LA multifamily sale with $5M gain, no 1031.
- Measure ULA: $550,000
- Federal capital gains + CA state + depreciation recapture: ~$1,750,000
- Total tax burden: $2,300,000 (23% of gross sale)
Same sale with 1031 exchange:
- Measure ULA: $550,000 (not avoided)
- Federal capital gains + CA state + depreciation recapture: $0 (deferred into replacement basis)
- Total tax burden at sale: $550,000 (5.5% of gross)
The 1031 saves $1.75M in deferred tax. Measure ULA's $550K hit still applies, but the combined position is dramatically improved.
A Deferred Sales Trust can, in specific structures, provide tax deferral advantages. Not the same as a Delaware Statutory Trust 1031 vehicle (different acronym, different structure, often confused).
A deferred sales trust is a trust-based sale structure where the seller sells to a trust, which then sells to the ultimate buyer. Federal and state capital gains tax is deferred based on the trust's installment sale treatment. Transfer tax treatment depends on specific structure.
Important caveat: DSTs are complex, require specialized counsel, and have audit and compliance considerations. They are not a general-purpose tool for every $5M+ sale. They can work for specific situations where a 1031 exchange isn't feasible and the seller wants to defer capital gains tax.
For sellers deciding whether to list in 2026, Measure ULA exposure changes the math:
If you own LA City and your building is worth $4.5M-$5.5M:
Consider whether you can legitimately sell below the $5M threshold. The transfer tax savings ($200K-$220K) can offset the pricing "discount."
If you own LA City and your building is worth $5.5M-$10M:
Factor Measure ULA into your net proceeds calculation. The 4% tax is real money that doesn't appear on most pre-sale BOVs. Consider 1031 exchange into non-LA-City replacement to avoid future Measure ULA.
If you own LA City and your building is worth $10M+:
The 5.5% tax is substantial. Sophisticated tax planning becomes valuable. 1031 into non-LA-City replacement is often the dominant strategy. DST structures may warrant consideration.
If you own outside LA City:
Measure ULA doesn't apply to your sale. But if you're 1031-ing into LA City inventory, future sales of that replacement will be subject to Measure ULA. Factor into long-horizon planning.
Measure ULA is paid by the buyer in most LA transactions, not the seller (despite common misunderstanding). However, the economics often shift to the seller through purchase price negotiation. Sophisticated buyers factor Measure ULA into their bid:
The net effect: Measure ULA has shifted some buyer demand from LA City to LA-adjacent cities. Sellers in LA City face slightly thinner buyer pools at $5M+ price points than comparable inventory in Burbank, Glendale, or Pasadena.
Measure ULA has been challenged in multiple lawsuits since its 2023 enactment. Results so far:
Practical seller guidance in 2026: Measure ULA is in effect and will remain in effect for the foreseeable future. Sellers should plan as though it applies, not as though it might be repealed.
Measure ULA is a specific, substantial, and widely-misunderstood tax on $5M+ LA City real estate sales. It's paid on top of capital gains tax, depreciation recapture, and existing transfer taxes. On a $10M LA multifamily sale, it's $550K — enough to change the math on whether to sell at all, or whether to sell now vs. 1031 out of LA City and sell the replacement elsewhere later.
Sellers who factor Measure ULA into pre-listing strategy typically save $100K-$500K vs. sellers who treat it as a closing-day surprise. The strategy is specific to your building, your basis, your timeline, and your next-use for capital — but getting it right starts before you list, not during escrow.
Request a free evaluation — including a Measure ULA impact analysis specific to your building's price point and jurisdiction →
Does Measure ULA apply to all LA property sales?
No. Only City of Los Angeles sales at $5M+ are subject to Measure ULA. Sales outside LA City (Burbank, Glendale, Santa Monica, Pasadena, LA County unincorporated, etc.) are not subject.
Does a 1031 exchange eliminate Measure ULA?
No. A 1031 defers federal and California capital gains tax but does not exempt the sale from transfer taxes. Measure ULA still applies.
Who pays Measure ULA — buyer or seller?
Legally, the tax is imposed on the transfer itself, typically paid by the buyer at closing. In practice, it's negotiated as part of the deal economics. Sellers often bear some or all of the cost through the sale price.
Can I avoid Measure ULA by selling through an LLC?
Generally no. LA has anti-avoidance rules for entity-structured transfers. Consult specialized tax counsel for entity-level structuring.
Will Measure ULA be repealed?
Proposition DD (November 2024) attempted to repeal it and failed. Legal challenges continue but have so far upheld the tax. Plan as though it will remain in effect.
What's the best strategy if I own $5M+ LA City multifamily?
Depends on your specific situation. For most sellers: factor Measure ULA into net proceeds calculation, consider 1031 exchange into non-LA-City replacement to avoid future exposure, and evaluate whether pricing slightly below $5M (if legitimate) avoids the tax entirely.
Related reading:
- The Complete 1031 Exchange Guide for LA Multifamily Investors
- How Much Tax Will I Pay When I Sell My Apartment Building in California?
- Try the 1031 Exchange Calculator
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap. $1.41 billion across 254 closed transactions, many at price points subject to Measure ULA. This is informational, not tax advice — consult a CPA or tax attorney for specific planning.
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