Los Angeles ‘Mansion Tax’ Upheld by California Appeals Court

Los Angeles’ tax on property sales of over $5 million—popularly known as the “mansion tax"—will stand after a California appeals court ruled that the ballot initiative establishing the tax was valid on Monday.

“We conclude the passage of Measure ULA pursuant to a majority vote of the City’s electorate was a valid exercise of the people’s initiative power,” Justice Armen Tamzarian wrote for the California Court of Appeal, Second Appellate District.

The Howard Jarvis Taxpayers Foundation and others asked the court to reverse a trial court’s ruling that the state constitution allows unlimited local tax legislation via voter initiative. They argued that the city’s charter bars the Los Angeles City Council from adopting special transfer taxes on real property, defined as taxes based on revenues that are set aside for a certain use.

The case challenged the validity of Measure ULA, a widely criticized measure that Los Angeles voters approved in 2022. The initiative, spurned by the real estate industry, imposes property transfer taxes of 4% on property sales and transfers of over $5 million and 5.5% on transfers of over $10 million as a means to raise funds for housing and tenant assistance programs.

The US Court of Appeals for the Ninth Circuit affirmed dismissal of a parallel federal challenge to the law in November, agreeing with the trial court that the federal Tax Injunction Act deprived the court of jurisdiction. The law bars federal suits against state and local taxes if there’s a “plain, speedy and efficient remedy” available in state court.

Monday’s opinion rejected each of the points brought by both Howard Jarvis and plaintiff Jonathan Benabou. In the published version of the opinion, the court addressed the assertion that the mansion tax was in violation of both the city’s rules governing tax increases and the state’s. In the unpublished version, it also addressed concerns brought by Benabou that the tax was unconstitutional, violating the 14th and First Amendments, and that the ballot materials were misleading.

The court, in its opinion, defended the right for voters to bring and pass ballot initiatives as a “precious right.”

Justice Audra M. Mori and Judge Craig B. Van Rooyen, sitting by designation from the San Luis Obispo County Superior Court, joined the opinion.

The Howard Jarvis Taxpayers Association represented itself. The Law Offices of Keith M. Fromm represented Jonathan Benabou, on behalf of a trust challenging the tax. Burke, Williams & Sorensen LLP represented Los Angeles. Irell & Manella LLP represented the Southern California Association of Non-Profit Housing Inc.

The case is Howard Jarvis Taxpayers Ass’n v. Los Angeles, Cal. Ct. App., 2d Dist., No. B334071, partially published 12/15/25.