Hollywood Celebrities Rush to Sell Multi-Million-Dollar Homes Before New Tax Kicks In
Some of the biggest names in Hollywood are in a rush to sell their multi-million-dollar houses in Los Angeles before the new “mansion tax” takes effect on April 1. In November of last year, voters supported Measure ULA, or “United to House L.A.,” which aims to raise up to $1 billion from luxury home sales to fund affordable housing projects.
Starting April 1, sellers of homes valued at between $5 million (£4 million) and $10 million (£8 million) will pay a four percent tax to the city. Meanwhile, those selling homes over $10 million will pay a 5.5 percent tax. The tax was introduced to “fund affordable housing projects and provide resources to tenants at risk of homelessness.”
The tax was implemented as the homelessness crisis in Los Angeles is growing. In 2020, the Los Angeles Homeless Services Authority estimated that there were already 42,000 homeless people, up from 28,000 in 2016. California also has the highest poverty rate in the United States.
As a result of the new tax, estate agents are experiencing a frantic scramble to offload mansions quickly by slashing prices. One property broker reportedly offered a $1 million bonus to any estate agent who could sign up a buyer for a $28 million Bel-Air mansion before the deadline.
Several celebrities have recently sold their properties, including Mark Wahlberg, who sold his Beverly Park mansion for $55 million. However, his 12-bedroom, 20-bathroom property has been on the market for almost a year, long before Measure ULA was introduced. Meanwhile, Jim Carrey’s 12,700 sq ft property, which sits on two acres, went on the market last month for $29 million.
One owner of a seven-bedroom, 11-bathroom mansion, which has a basketball court and 70ft infinity pool, recently cut the asking price by $6 million, to $38 million, in an attempt to sell by next week.
The tax is on sales prices, not profit, meaning sellers have to pay even if they are making a loss. Luxury property brokers have described the tax as causing “dramatic price reductions on many homes.” Wealthy buyers, who are able to make all-cash offers, are snapping up mansions for bargain prices.
In summary, the new mansion tax has resulted in homeowners, especially celebrities, rushing to sell their multi-million-dollar homes in Los Angeles before the tax takes effect in April. The tax was implemented to help fund affordable housing projects and provide resources to homeless people. However, estate agents have been slashing prices to offload mansions quickly before the deadline, with some owners cutting asking prices by as much as $6 million.
