The True Cost of Transfer Taxes When Selling LA Apartment Buildings

Selling an apartment building in Los Angeles can be a lucrative move—but hidden costs like transfer taxes can significantly reduce your net proceeds. As a savvy multifamily property owner or investor, understanding these expenses is crucial to making informed decisions and maximizing your return on investment. At The Group CRE, we specialize in guiding clients through the complexities of selling multifamily buildings across Los Angeles County. For more insider tips, explore our Resources.

Whether you’re selling in the City of Los Angeles, Santa Monica, Culver City, or beyond, this guide will break down the tax landscape and show you how to plan your sale strategically. Let’s get started.

Why Transfer Taxes Matter When Selling Multifamily Properties

Transfer taxes are fees imposed by county and city governments when a property changes ownership. Typically paid by the seller, these taxes are calculated as a percentage of the sale price. In Los Angeles County, the base county transfer tax is 0.11%, but local cities add their own rates—sometimes using a tiered structure for high-value sales.

Recent initiatives like Measure ULA in Los Angeles and Measure GS in Santa Monica have introduced additional “luxury taxes” for sales above specific thresholds. For high-value multifamily properties, these extra fees can climb into the hundreds of thousands of dollars, making it essential to factor them into your sale strategy.

City-by-City Transfer Tax Breakdown

Here is a detailed look at transfer tax rates in key Los Angeles County markets:

1. City of Los Angeles

• Base Rate: 0.56% (0.11% county + 0.45% city)
• Measure ULA (effective April 1, 2023):
  • 4% additional tax on sales between $5,150,001 and $10,300,000
  • 5.5% additional tax on sales over $10,300,000
• Total Rates:
  • Up to $5,150,000: 0.56%
  • $5,150,001 to $10,300,000: 4.56%
  • Over $10,300,000: 6.06%

Note: Measure ULA thresholds adjust annually for inflation. After June 30, 2025, they increase to $5,300,000 and $10,600,000.

2. Santa Monica

• Base Rate: 0.41% (0.11% county + 0.3% city for sales under $5 million)
• Measure GS (effective March 1, 2023):
  • 0.6% for sales between $5 million and $7,999,999.99
  • 5.6% for sales $8 million or more
• Total Rates:
  • Under $5 million: 0.41%
  • $5 million to $8 million: 0.71%
  • Over $8 million: 5.71%

3. Culver City

• Base Rate: 0.56% (0.11% county + 0.45% city for sales up to $1.5 million)
• Progressive City Tax (effective April 1, 2021):
  • 1.5% on the portion between $1.5 million and $3 million
  • 3% on the portion between $3 million and $10 million
  • 4% on the portion over $10 million
• Total Rates: Vary based on the sale price due to the progressive structure.

4. Pomona

• Flat Rate: 0.56% (0.11% county + 0.45% city) for all sale prices.

5. Redondo Beach

• Tiered Rate:
  • 0.26% (0.11% county + 0.15% city) for sales up to $5 million
  • 0.56% (0.11% county + 0.45% city) for sales over $5 million

Real-World Examples: What Will You Pay?

Below is a comparison of transfer tax costs for selling a multifamily building at various price points:

Step-by-Step Transfer Tax Calculation Example

For example, if you’re selling a multifamily building in Culver City for $6 million, here’s how you would calculate the transfer tax:

1. City Tax (Real Property Transfer Tax):
   • First $1.5 million: 0.45% = $6,750
   • Next $1.5 million (up to $3 million): 1.5% = $22,500
   • Remaining $3 million (up to $6 million): 3.0% = $90,000
   • Total city tax = $6,750 + $22,500 + $90,000 = $119,250
2. County Tax:
   • 0.11% of $6 million = $6,600
3. Total Transfer Tax:
   • $119,250 (city) + $6,600 (county) = $125,850

This calculation demonstrates how quickly transfer taxes can add up—especially under progressive structures like in Culver City.

Other Costs When Selling an Apartment Building

Transfer taxes are only one element of your total selling costs. Other expenses include:

• Broker Commissions: Typically 4-6% of the sale price.
• Closing Costs: Escrow fees, title insurance, and legal expenses.
• Capital Gains Taxes: Federal and state taxes on your profit, which can be significant for long-held properties.

Working with an experienced apartment broker can help you minimize these costs and optimize your sale strategy.

Location Matters: Choose the Right Market

Transfer tax rates vary widely across Los Angeles County. For example, on a $12 million sale, you might pay $727,200 in Los Angeles compared to only $67,200 in Pomona—a savings of over $660,000! Although lower taxes in markets like Pomona and Redondo Beach are attractive, factors such as market demand and rental income potential should also guide your decision.

Maximize Your Sale with Expert Guidance

Selling a multifamily building in Los Angeles involves many moving parts. Understanding transfer taxes can help you avoid unexpected costs and secure more of your proceeds. At The Group CRE, our team of experts is ready to help you navigate this complex landscape and develop a strategy that works best for you.

Additional Resources

• Los Angeles Measure ULA FAQ
• Santa Monica Transfer Taxes
• Culver City Tax Information
• City Transfer Tax List

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