Well-heeled residents leave LA to escape mansion and other taxes

Metro market tops national list of locales where homeowners are looking to exit

Upscale Residents Leave LA to Escape Mansion, Other Taxes
Los Angeles, Las Vegas and Seattle (Illustration by The Real Deal with Getty)

Some of L.A.’s super rich have packed their Louis Vuitton luggage for other states in the wake of the city’s mansion tax.

More ultra-wealthy Angelenos are scouring the out-of-state market for good deals, looking for lower taxes rather than an exclusive zip code near the beach, Business Insider reported.

Los Angeles topped Redfin’s list last month of U.S. metropolitan markets where homeowners are looking to leave the most, based on its user data of home searches. 

The data suggest Californians were most likely to dream of moving to Las Vegas and Seattle, and many seemingly took the plunge as the state lost 350,000 residents between 2021 and last year.

Lower taxes and more space have also lured residents to Florida, Texas, Tennessee and beyond.

Among them was Gus Lira, a managing partner at a private jet charter company, who loved where he lived in Malibu. But he decided to decamp to a $1.9 million home with a pool in Summerlin, near Las Vegas, while holding on to his Malibu retreat.

“I’m not a California resident anymore,” Lira told Business Insider. “Couldn’t afford it anymore. You can’t get ahead when you get $100 and they take $60.”

The luxury home market in Los Angeles has stalled with high interest rates, the fallout of the Hollywood strikes and the rising cost of insurance.

For some wealthy residents of L.A., the final straw was the “mansion tax,” which took effect in April. Measure ULA imposes a 4 percent tax to property sellers on homes above $5 million and a 5.5 percent levy on homes above $10 million.

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The luxury sector has sounded the alarm since 57 percent of L.A. voters approved the measure in November 2022. 

Lira, who as a resident of Malibu wasn’t affected by the tax, called Measure ULA the “coup de grâce” for him and his high-earning friends to leave the state.

Jade Mills, a high-end residential agent in L.A., had clients who were looking to sell their $20 million home, but backed out when they realized they would have to pay the 5.5 percent tax, which came to more than $1 million.

Some of the wealthiest residents are deciding to keep their L.A. homes but rent them out as luxury pads rather than accept lackluster prices in a sluggish market.

Rob Desantis, a homeowner, listed his seven-bedroom, 12-bathroom Manhattan Beach home for $150,000 a month.

“This is a hedge,” Desantis, an investor, told Bloomberg. “I believe leasing it out will highlight the value of the property in a much better way.”

The impasse has hit reality TV, as L.A. brokers in the popular Netflix series “Selling Sunset” opened their latest season complaining about the slowdown and the city’s mansion tax.

“This is going to be a nightmare for us,” agent Mary Fitzgerald said on the show. “We’re just screwed.”

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