This Greater Los Angeles city has no Mansion Tax

Beverly Hills: A Luxury Market Untouched by Los Angeles’ Mansion Tax

Beverly Hills, synonymous with luxury and opulence, has long been a haven for the world’s wealthiest. Recent developments have only strengthened its allure, particularly in light of the 2023 Los Angeles mansion tax, which has affected the broader Los Angeles area but not Beverly Hills. This tax, known as Measure ULA (United Los Angeles), imposes a 4% levy on property sales over $5 million and a 5.5% tax on sales exceeding $10 million within Los Angeles. The proceeds are directed toward affordable housing and addressing homelessness, raising $215 million in its first year. However, the tax has caused significant ripples in the luxury real estate market, deterring both buyers and sellers in LA from high-end transactions.

In contrast, Beverly Hills, an independent city, remains exempt from this tax, creating a competitive advantage for its luxury real estate market. While sales in Los Angeles have declined after this measure passed, by approximately 40% in the high-end sector due to the mansion tax, Beverly Hills has only experienced a 20% drop, according to appraiser Jonathan Miller. This difference highlights the significant impact the tax is having on the broader LA market and underscores Beverly Hills' growing appeal as a tax-free luxury destination.

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The exemption has particularly benefited the wave of new luxury condominium developments in Beverly Hills, including prestigious projects from brands like Mandarin Oriental and Rosewood. These developments cater to ultra-high-net-worth individuals seeking estate-sized condos with amenities that rival five-star hotels. For instance, the Mandarin Oriental Residences, the first new condo project in Beverly Hills in over a decade, features 54 dwellings with prices ranging from $2.97 million for a one-bedroom to $50 million for a penthouse. The absence of a mansion tax significantly enhances the attractiveness of these properties, as buyers can avoid the additional financial burden that would otherwise be imposed in Los Angeles.

Similarly, the Rosewood Residences Beverly Hills, another highly anticipated development, offers estate-sized condos starting at $10 million, with penthouses priced up to $45 million. Developers and buyers alike are relieved that Beverly Hills remains exempt from the mansion tax, which would have added millions of dollars to the cost of these properties, potentially deterring investment.

The tax exemption also extends to Beverly Hills' single-family homes, which continue to attract interest from the global elite. Properties like the $18.99 million estate on Summitridge Drive and the $48.5 million Empire revival mansion on Beverly Park Way offer luxurious living without the added expense of a mansion tax. This has kept the Beverly Hills market buoyant, even as other luxury markets experience slowdowns.

Moreover, the ongoing development of the One Beverly Hills project, which includes the Aman Beverly Hills hotel and approximately 200 residences, is set to further elevate the city’s status as a premier destination for luxury living. Behind-the-scenes sales for these yet-to-be-completed residences are reportedly brisk, indicating strong demand despite the broader economic challenges facing the real estate market.

The decision to exclude Beverly Hills from the mansion tax has had far-reaching implications. It not only preserves the city’s status as a tax haven for the ultra-wealthy but also continues to draw international buyers looking to invest in a market that offers both luxury and financial advantages. As Los Angeles grapples with the effects of Measure ULA, Beverly Hills stands out as a unique enclave where luxury real estate thrives, free from the burdens of the mansion tax.

For real estate professionals like Herb Rim of RIM Property Group, this presents an opportunity to market Beverly Hills properties as tax-advantaged investments, appealing to clients who are sensitive to the financial implications of high-end real estate transactions. By emphasizing the city’s exemption from the mansion tax,  Beverly Hills is a premier choice for discerning buyers looking to maximize their investment while enjoying the ultimate in luxury living.