Inside the City of Los Angeles, a $5.4 million offer on a Brentwood home can leave the seller with more money than a $5.6 million offer. Measure ULA is the reason. The tax works as a step. Once a sale goes over the threshold, the surcharge applies to the entire price, starting from the first dollar. Several recently reported Brentwood listings and sales sit just under that line.
The Math Above the Line
The City's Office of Finance has set new thresholds for transactions closing after June 30, 2026. Sales above $5,400,000 and below $10,900,000 pay a 4% ULA tax. Sales at $10,900,000 or more pay 5.5%. Both rates sit on top of the City's base transfer tax of 0.45%. The combined City rates come to 0.45% at or below the threshold, 4.45% in the middle tier and 5.95% at the top.
Here is what that schedule does to a seller's proceeds. The figures below count only the City transfer tax and ignore commissions, county tax and every other closing cost.
| Sale price | City transfer tax | Seller proceeds after City tax |
|---|---|---|
| $5,400,000 | $24,300 | $5,375,700 |
| $5,500,000 | $244,750 | $5,255,250 |
| $5,600,000 | $249,200 | $5,350,800 |
| About $5,626,000 | About $250,350 | About $5,375,700 |
A sale has to reach roughly $5.63 million before the seller nets what a $5.4 million sale would have produced. Anywhere in that band, a higher offer still leaves the seller with less than the $5.4 million sale would have. The top tier works the same way. A sale at $10,899,999 pays 4.45%, and a sale at $10,900,000 pays 5.95%. By our arithmetic, the price has to clear about $11.07 million before the seller recovers what was lost by crossing that second line.
Economists call this structure a notch. The Beacon Economics and Pepperdine report on the measure describes it this way: crossing the threshold "triggers a substantial increase in transfer tax liability applied to the full transaction value rather than only the portion above the threshold," and so "relatively small changes in negotiated sale price can produce very large differences in total taxes owed."
Where the Sales Actually Land
If sellers respond to that math, sale prices should pile up just under the line and grow scarce just over it. The July 2026 Beacon Economics and Pepperdine study, which used transaction-level Chicago Title data, found exactly that. In fiscal 2023, before ULA, sales above about $4 million in the City and in the rest of Los Angeles County followed broadly similar patterns. By fiscal 2024, City sales had become "increasingly concentrated just below the applicable ULA threshold, particularly near the $5 million cutoff," with fewer sales above it. The rest of the county showed no such pattern.
The same report estimates that monthly high-value transaction counts in the City fell about 41% relative to surrounding jurisdictions after ULA took effect. It found no statistically significant change below the threshold. Its counterfactual puts the gap at roughly 1,000 fewer high-value transactions between January 2024 and March 2026. Readers weighing those figures should know two things. The research was supported by the Greater Los Angeles Association of Realtors and the Arthur N. Rupe Foundation, though the authors say they set the design and conclusions independently. The authors also say their data cannot tell apart a sale repriced below the line from one that was delayed, moved elsewhere or never happened. ULA's supporters dispute studies that blame the tax for falling activity, as LAist has reported.
A July 2025 UCLA Anderson paper explains why the gap above the line stays thin. Sellers want a premium to cover the tax. Buyers would rather keep looking among the cheaper homes bunched below the notch. The paper concludes that "there is a strong incentive for buyers and sellers in the proximity of the notch to not transact."
How It Shows Up on Brentwood Streets
Recent Brentwood coverage keeps landing in the same narrow band. In July 2026, The Real Deal reported a Brentwood Hills home at 2536 Pesquera Drive listed for $5.2 million. That same month, Brentwood News reported a $5 million purchase of a Mediterranean property in Brentwood. In August 2026, Brentwood News covered 2663 Cordelia Road in Brentwood Hills, listed for $4.95 million.
None of these reports says the price was set with ULA in mind, and a few data points do not make a trend. They do sit where the countywide clustering data says City of LA prices tend to gather. For a buyer, the practical upshot is about how close two listings really are. A home asking $5.35 million and one asking $5.55 million can look like neighbors on a search screen, but they sit on opposite sides of a $200,000-plus tax swing. Negotiation over the second home tends to circle back toward the line.
Geography adds a layer. Brentwood is inside the City of Los Angeles, and the separately incorporated City of Beverly Hills is outside ULA. The ZIP code alone won't tell you which side a home is on. The Los Angeles Business Journal identifies Beverly Hills Post Office as a Los Angeles area, so a 90210 address does not by itself mean a home is exempt.
The Inventory That Never Lists
The notch also keeps some homes off the market altogether. In July 2026, The Real Deal reported that Oren Levy of Gesh Group, a luxury builder that also remodels, has watched his business reverse. Before ULA it was 80% new development and 20% remodels. It is now about 60% remodeling and 40% new builds, because owners are renovating rather than selling. The outlet cited ATTOM Data Solutions figures showing a 46% increase in remodel permits for high-priced City of LA homes, comparing 2018 and 2019 with the two years after ULA took effect. The UCLA Anderson paper found new-construction permits across the City fell 21% after the tax was announced in November 2022, compared with pre-tax trends.
For a buyer looking just above $5.4 million in Brentwood, this means fewer homes to choose from. Owners who might have sold into that band have reasons to stay put and renovate. Builders who might have delivered new product into it have reasons to work elsewhere.
What the November 3 Ballot Could Change
Most of the challenges that might have reset this math have already stalled. On June 25, 2026, the Howard Jarvis Taxpayers Association withdrew its statewide initiative to cap local transfer taxes after reaching a deal with state leaders. The compromise left existing taxes such as ULA in place, CalMatters reported. On July 1, 2026, the City Council voted 14 to 0 to shelve a proposed November measure that would have exempted new multifamily and residential mixed-use buildings, according to LAist.
Proposition TE goes to City voters on November 3, 2026. It would grant a one-time ULA exemption for residential properties damaged or destroyed in the Palisades Fire and sold between January 7, 2025 and January 6, 2030. The proposed code text defines eligibility by fire damage, with no reference to a neighborhood:
"the land, tenements, or other realty sold within the City of Los Angeles is a residential property damaged or destroyed by the Palisades Fire in January 2025"
The measure also requires the damage to be verified by the Department of Building and Safety. The seller must have owned the property on January 7, 2025, and the property cannot have received the exemption before. That reaches into Brentwood. During the fire, ABC7 reported a home engulfed in flames. Whether a given Brentwood parcel qualifies would depend on its own verified damage record and ownership history.
The City Administrative Officer estimates the exemption would reduce ULA revenue by $35 million to $66 million through January 2030. The Los Angeles Times voter guide notes that opponents argue it could benefit investors and landlords as well as owner-occupants. As of October 12, 2026, Proposition TE is a pending measure and has not become law.
Questions Buyers Raise About the Notch
Who pays the City transfer tax in a Brentwood sale? Old Republic Title's Southern California closing-cost guide says the allocation of closing costs follows local custom and can be negotiated. Who bears the ULA amount in a particular deal comes down to the purchase contract, and buyers and sellers often take that up with their own tax and legal advisors.
Does the tax apply only to the amount above $5.4 million? No. The rate applies to the full price conveyed once a sale exceeds the threshold.
Has ULA survived legal challenges? An August 12, 2026 alert from Hanson Bridgett says ULA survived its initial state and federal court challenges.
If you are pricing a Brentwood home near $5.4 million or bidding on one just above it, Michael Fenton can run those numbers on a specific property with you in private before an offer or a list price is set. Book a confidential consultation.
This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.