How can a Brentwood home that sells for $5.5 million leave its seller with about $120,000 less than the same home sold for $5.4 million?
The cause is the City of Los Angeles transfer tax approved as Measure ULA. Brentwood is inside city limits, so every sale there runs through it. Since July 1, 2026, the City's Office of Finance has applied a 4% ULA tax to sales above $5,400,000 and below $10,900,000, and 5.5% at $10,900,000 or more. That sits on top of the City's base transfer tax of 0.45%. The rate isn't charged on the amount above the threshold. It's charged on the whole price. So the tax doesn't climb gradually. It jumps the moment a price crosses the line, and in Los Angeles the seller customarily pays it.
In Brentwood, list prices, offer strategy, and whether a family sells at all now bend around that one number.
The math at the threshold
The table uses the City's published rates for closings after June 30, 2026. It shows the City's base tax plus ULA only. It leaves out the separate Los Angeles County documentary transfer tax, commissions and every other closing cost, so it isolates the effect of the cliff itself.
| Sale price | City base tax at 0.45% | ULA tax | Seller keeps after City transfer tax |
|---|---|---|---|
| $5,400,000 | $24,300 | $0 | $5,375,700 |
| $5,450,000 | $24,525 | $218,000 | $5,207,475 |
| $5,500,000 | $24,750 | $220,000 | $5,255,250 |
| about $5,626,000 | about $25,320 | about $225,040 | about $5,375,700 |
| $5,650,000 | $25,425 | $226,000 | $5,398,575 |
A sale exactly at $5,400,000 owes no ULA, because the tax applies only when the value is greater than that figure. One dollar more, and roughly $216,000 is due. For the seller to come out even after City transfer tax, the price has to reach about $5.63 million. Every price from just over $5.4 million up to about $5.63 million leaves the seller with less than a sale right at the line.
The same thing happens again higher up. At $10,900,000 the rate moves from 4% to 5.5% on the full price. That adds roughly $163,000 compared with a sale a dollar below.
The band that rarely closes
Once you see the numbers above, the research that followed is easy to read. The UCLA Lewis Center's April 2025 report estimated that above-threshold transactions across Los Angeles fell about 49% to 55% in ULA's first 20 months. Its authors said the evidence wasn't definitive. The Los Angeles Business Journal quoted commercial real estate voices who pointed to interest rates and a broader downturn as competing explanations.
A working paper by Yingru Pan, summarized by the UCLA Anderson Review in February 2026, looked straight at the line. It studied the original $5 million cutoff, not today's $5.4 million. Sales in the $4.95 million to $5 million range outnumbered sales in the first taxable range by 47%. After the tax took effect, the $4 million to $5 million tier recorded three to five times as many monthly sales as the $5 million to $6 million tier. The same paper was posted to SSRN in September 2026, still as a working paper.
For a Brentwood home worth somewhere between $5.4 million and $5.63 million on its merits, this leaves two realistic outcomes. It trades at or just under the line, or it holds out for a buyer willing to pay well past it. A buyer's appraisal and comparable sales don't change because the seller owes the City a large check. As one Los Angeles agent told The Real Deal in July 2026, buyers generally don't assign extra value to a property just because the seller has a big ULA bill.
The line moves every July
The thresholds are indexed to inflation and reset each year. The County Recorder's table shows $5.3 million and $10.6 million for closings starting July 1, 2025, and $5.4 million and $10.9 million starting July 1, 2026.
What matters is the closing date, not the date of the offer. A Brentwood home that went into escrow in June 2026 at $5.35 million owed ULA if it closed before July 1 and owed nothing if it closed after. Pricing that was set against last year's line now leaves $100,000 of tax-free room. Comparable sales from before July 2026 also need a second look. A sale recorded at $5.29 million in spring 2026 may reflect where the line sat then, not the most a buyer would have paid.
That's why the date on the closing statement can carry as much weight in a Brentwood negotiation near $5 million as the number on the purchase agreement.
Why some owners remodel instead
When the cliff, commissions and a higher mortgage rate on the next home all point the same direction, some owners stay put. In the same July 2026 report, The Real Deal described a planned Brentwood sale that gave way to a renovation instead. Transfer tax and agent commissions together would have taken about 11% of the proceeds, so that money went into renovating the current home instead. The builder quoted in that story put high-end remodels on homes above the threshold at roughly $1 million to $6 million, with many in Sherman Oaks, Encino, Bel Air and Brentwood.
Pan's paper backs this up across the city. Comparing permit data from 2018 and 2019 with the two years after ULA took effect, remodel permits for high-priced homes rose 46%. Mid-priced homes showed no statistically significant change. Every renovated house that stays off the market is one fewer listing in the band buyers are shopping. For Brentwood buyers above $5 million, that helps explain why the inventory can feel thinner than the number of large homes in the neighborhood would suggest.
This post doesn't cite a current Brentwood median. Market-wide figures are easy to find. In August 2026, the California Association of Realtors put the Los Angeles County single-family median at $946,950. A countywide median says nothing about what happens at $5.4 million, though, and we didn't find a recent Brentwood-only breakdown of sales above and below the line. A ZIP-level median would also blend sales right at the threshold with sales just under it, so the cliff wouldn't show. If you're curious how your own home sits relative to the line, a private valuation is a more useful starting point than any neighborhood average.
What has been tried, and what is on the ballot
ULA has held up through several attempts to change it, and each outcome shapes how much weight a seller can put on relief arriving.
- December 15, 2025. California's Court of Appeal upheld ULA and rejected the Howard Jarvis Taxpayers Association challenge. Courthouse News reported the group was considering asking the state Supreme Court to review it.
- January 2026. A City Council proposal floated a 15-year exemption for new construction and temporary relief for disaster hardship, as reported by the Daily News.
- June 17, 2026. Council voted 9 to 5 to draft a 10-year exemption for newly built multifamily buildings, according to the Los Angeles Times.
- June 26, 2026. LAist reported that the statewide initiative that could have capped or repealed local transfer taxes was withdrawn as part of a compromise that left existing taxes such as ULA in place.
- July 1, 2026. Council voted 13 to 1 to note and file the multifamily exemption, so it never took effect, MyNewsLA reported.
The tax has also produced a lot of money. The Los Angeles Times reported in September 2026 that ULA has generated more than $1.3 billion since it took effect.
The live question for November 3, 2026 is Proposition TE. The City Clerk's voter pamphlet describes it this way:
If a damaged or destroyed residential property is sold between January 7, 2025 and January 6, 2030 by the owner on the date the Fire began, the sale would qualify for a one-time refund or exemption from the Proposition ULA tax.
In Brentwood, the measure would reach a small number of properties. Los Angeles Times reporting from January 2025 said at least two remote hillside homes in Mandeville Canyon appeared to have burned as the Palisades Fire moved toward Brentwood. That was a preliminary observation from aerial video. The county keeps an address-searchable Palisades Fire damage map and notes that its assessments are preliminary. For the rest of Brentwood, the $5.4 million line stays where it is. Next door, the land-versus-home split in Pacific Palisades pricing is where Proposition TE would matter more.
A few questions sellers ask
Does ULA apply in Malibu or Santa Monica? No. ULA is a City of Los Angeles tax. It covers Brentwood and Pacific Palisades, not separate cities.
Is it only charged on the amount above $5.4 million? No. The 4% or 5.5% rate applies to the full value conveyed once the price crosses the threshold.
Which threshold applies to my sale? The one in effect on the closing date. Closings after June 30, 2026 use $5.4 million and $10.9 million.
Can a buyer pay the tax? Custom in Los Angeles is that the seller pays. Any other arrangement, and what it means for you, is a question for your tax advisor and attorney.
If your Brentwood home might sell near $5.4 million, the list price, the closing date and the comparable sales all deserve a careful look before anything goes public. Tessa Cosentino can go through those numbers with you privately, at your pace. Let's chat and schedule a time to connect.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.
